ASIC has cancelled or suspended twenty-one Australian credit licences for failing to be a member of the Australian Financial Complaints Authority (AFCA).
Australian credit licence holders are required by law to be a member of AFCA. AFCA membership gives consumers access to a free, fair, and independent dispute resolution scheme if a complaint is not properly considered or resolved by a credit licensee. AFCA provides consumers and small businesses with an alternative to tribunals and courts to resolve complaints.
ASIC works with AFCA to identify financial services licensees and credit licensees that do not comply with their obligation to maintain their AFCA membership. Where an entity fails to comply, ASIC will take action to cancel or suspend their credit licence.
Background
Under the National Credit Act, ASIC has the power to cancel or suspend credit licences.
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On 1 November 2018, AFCA was formed to provide external dispute resolution services for consumers that have unresolved complaints with entities providing financial and credit services. AFCA deals with complaints about financial firms including banks, credit providers, insurance companies and brokers, financial advisers, managed investment schemes and superannuation trustees.
As part of their general conduct obligations, all Australian financial services licensees and ACL holders are required to obtain AFCA membership. Failure to maintain AFCA membership is grounds for ASIC to cancel or suspend a licence.
