The recent release of Royal Commission into Banking’s final report could have significant ramifications on Australian businesses and consumers. Banks, financial institutions and licensees within the industry have broken the law. With conflict of interest to earn fees and boost bottom line, there were no consequences in place.
Regulators such as the Australian Securities and Investments Commission (ASIC) and Australian Prudential Regulation Authority (APRA) were not holding banks accountable nor were they policing or enforcing anything. While the report highlighted what went wrong, the ASIC will prosecute more and uphold compliance requirements. Although there is currently a sense of fairness and justice, it won’t help borrowers and people mistreated by this conduct.
However, that’s not to say that victims – those whose loan contract was unfair, had excessive fees and charges, lent irresponsibly, caused hardship, etc. – can’t take action themselves. Everyday consumers and SMEs can be proactive where laws have been breached and they have suffered a loss. It’s not simply replying on government watchdogs, but instead utilising the free services that the Australian Financial Complaints Authority (AFCA) offer.
The AFCA have jurisdiction to hear and mediate cases and can award from $500,000 to $5 million dollars, depending on the type of loan or advice as well as the loss and damage. They make decisions binding on the financial industry without the requirements of lawyers or rules of evidence.
The AFCA also freezes or stops court action from lenders, which is very powerful. There is an external dispute resolution which victims can apply for online so they can receive compensation where they have been wronged by lenders or financial advisers. All that is required is lodging an application online which only takes five minutes, so it is recommended to act now.
Financial institutions should be held accountable and punished for their wrongdoings, but the Banking Royal Commission report does not force them to compensate for lost money. Unfortunately, ASIC and APRA won’t be able to help either. It is the individual’s responsibility to make that decision.
The good news is that it is not necessary to go to court. The AFCA have broad powers which addresses the imbalance of power and facilitates individual compensation.