One-stop-shop for small business dispute resolution welcomed

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) welcomes the passing of legislation to establish a new body to deal with dispute resolution, the Australian Financial Complaints Authority (AFCA).

Ombudsman Kate Carnell said she is particularly pleased with the more flexible definition of a small business as fewer than 100 employees and a rise in the compensation cap for agricultural small business of up to $2 million.

“And [it] is good to see that a small business will be able to seek resolution of a dispute where the credit facility is up to $5 million and potentially receive compensation of up to $1 million,” Ms Carnell said.

“Small businesses do not have the time or the money to hire lawyers and challenge banks and other financial institutions through the court system. This will significantly improve small businesses’ access to justice, which we raised in our Small Business Loans Inquiry last year.

“The AFCA one-stop-shop will be free, fast and binding, and will provide the forum where the needs of small business are understood, which we hope will significantly reduce the need for litigation. We look forward to when AFCA will open its doors later this year.”

The Financial Ombudsman Service (FOS) also welcomed the legislation, saying that it provides certainty about the future of dispute arrangements for the financial sector.

“The establishment of AFCA will simplify, strengthen and increase access to free external dispute resolution for individuals and for small businesses,” said FOS Chief Ombudsman Shane Tregillis.

The Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, has announced that AFCA will commence no later than 1 November 2018. The FOS said that it will continue working closely with Dr Malcolm Edey’s transition team, ASIC and all stakeholders to enable AFCA to be ready to operate by the commencement date.