Senate

Supplementary Explanatory Memorandum

(Circulated by authority of the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP)

Glossary

The following abbreviations and acronyms are used throughout this supplementary explanatory memorandum.

General outline and financial impact

Amendments to the Treasury Laws Amendment (Putting Consumers First-Establishment of the Australian Financial Complaints Authority) Bill 2017

The amendments to the Treasury Laws Amendment (Putting Consumers First-Establishment of the Australian Financial Complaints Authority) Bill 2017 provide additional certainty and clarity around aspects of AFCA's operations to ensure that it operates as effectively as possible.

Date of effect: The amendments apply from the day after the Treasury Laws Amendment (Putting Consumers First-Establishment of the Australian Financial Complaints Authority) Bill 2017 receives the Royal Assent.

Proposal announced: The amendments have not previously been announced.

Financial impact: The amendments do not alter the financial impact outlined in the explanatory memorandum to the Bill.

Compliance cost impact: The amendments have no additional compliance cost impact.

Amendment to the Treasury Laws Amendment (Putting Consumers First-Establishment of the Australian Financial Complaints Authority) Bill 2017

Outline of chapter

1.1 The amendments to the Treasury Laws Amendment (Putting Consumers First-Establishment of the Australian Financial Complaints Authority) Bill 2017 (the Bill) provide additional certainty and clarity around aspects of AFCA's operations to ensure that it operates as effectively as possible.

Detailed explanation of new law

Amendments to the Treasury Laws Amendment (Putting Consumers First-Establishment of the Australian Financial Complaints Authority) Bill 2017

1.2 Amendment 1 amends the commencement table in the Bill to ensure the Bill operates as intended. [Amendment 1, item 3 of commencement table in clause 2]

1.3 Amendment 2 provides an additional mandatory requirement for the operator of the EDR scheme so that the operator's constitution must provide that the operator will have an independent person as the chair of the board. [Amendment 2, Schedule 1, paragraph 1051(3)(da) of the Corporations Act 2001]

1.4 Amendment 3 ensures that AFCA will have the ability to issue directions to protect the confidentiality of information in connection with, or as part of the process of, determining a superannuation complaint. AFCA will have the ability to:

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give directions prohibiting or restricting the disclosure of documents or information relating to the superannuation complaint; and

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give directions as to who may be present at any meeting held by AFCA relating to the superannuation complaint .[Amendment 3, Schedule 1, subsection 1054BA(1) of the Corporations Act 2001]

1.5 In giving directions, AFCA must have regard to the wishes of the parties in relation to the complaint and the need to protect their privacy. Such directions may be made in writing or orally. [Amendment 3, Schedule 1, subsections 1054BA(2) and (3) of the Corporations Act 2001]

1.6 A person must not refuse or fail to comply with a direction of AFCA. The penalty for non-compliance with such a direction by AFCA will be 30 penalty units. [Amendment 3, Schedule 1, subsection 1054BA(4) of the Corporations Act 2001]

1.7 Amendment 4 creates a new provision that provides AFCA with the ability to cancel the complainant's membership in a life policy fund, or in any sub-plan of the fund, if the complaint relates to the complainant being unfairly or unreasonable admitted into the life policy fund. [Amendment 4, Schedule 1, subparagraph 1055(6)(c)(iv) of the Corporations Act 2001]

1.8 Amendment 5 clarifies that, before a person can make a complaint to AFCA about a decision by a death benefit decision-maker relating to the payment of a death benefit, the person must have an interest in the death benefit. [Amendment 5, Schedule 1, subsection 1056(1) of the Corporations Act 2001]

1.9 Amendments 6 to 8 provide that if the decision-maker gave the person notice of the death benefit decision-maker's proposed decision relating to the payment of a death benefit, and that notice specified that the person can object to the decision-maker within the period of 28 days after the notice was given, the person may only object to the proposed decision within that 28 day period. [Amendments 6 to 8, Schedule 1, paragraph 1056(2)(a) of the Corporations Act 2001]

1.10 Amendments 9 to 11 provide that if the decision-maker gave the person notice of the decision-maker's final decision relating to the payment of a death benefit, and that notice specified that the person must make a complaint to AFCA within the period of 28 days after the notice was given, the person may only make the complaint within that 28 day period. [Amendments 9 to 11, Schedule 1, paragraph 1056(2)(b) of the Corporations Act 2001]

1.11 Amendments 12 to 14 provide that if the person has not been given either notice of the decision-maker's proposed decision or notice of the decision-maker's final decision from the death benefit decision-maker, or if the notices did not specify the relevant timeframes, then that person may make a complaint to AFCA at any time. AFCA must then be satisfied that the person making the complaint has both an interest in the death benefit and that it was unreasonable for the person not to be given those notices from the decision-maker. [Amendments 12 to 14, Schedule 1, subsection 1056(3) of the Corporations Act 2001]

1.12 Amendment 15 clarifies that once a death benefit decision-maker has been notified by AFCA that a complaint has been made in relation to a final decision about the payment of a death benefit, the decision-maker must give notice to each person (other than to the complainant) that the decision-maker believes, after having made reasonable enquires, may have an interest in that death benefit. [Amendment 15, Schedule 1, subsection 1056A(1) of the Corporations Act 2001]

1.13 Amendment 16 provides that the notice given to each person (other than the complainant) that the decision-maker believes may have an interest in that death benefit must include the timeframe (which is either 28 days after the person is given notice or such longer period as allowed by AFCA) in which the person may apply to AFCA to be joined as party to the complaint. [Amendment 16, Schedule 1, paragraph 1056A(2)(c) of the Corporations Act 2001]