AFCA examines possibilities for fairer funding model
The Australian Financial Complaints Authority (AFCA) is examining how it can reduce cross-subsidisation when it comes to levy funding and treat smaller firms more fairly.
Speaking at the AFCA member forum, chief executive, David Locke, said AFCA was awaiting the results of a Treasury independent review into the body which was expected “any day now”.
Regarding what the review might advise on fees and funding, Locke said AFCA was already exploring how it could reduce cross-subsidisation in particular.
“This is something we have been considering and we are awaiting any recommendation from the independent review,” Locke said.
“Our starting point was to establish principles and one of us was around cross-subsidisation. You don’t want to have insurers cross-subsidising the work they handle with banks or financial advisers being granted fees related to other areas.”
Another area was how funding could work for small firms or those which received few complaints.
“We are also looking at how we can keep fees low, particularly for matters that involve a small amount of funds and where they are being resolved very early on, in the registration stage,” Locke said.
“We’re looking at how we can work with smaller members or members who have very few complaints.
“Clearly, when you make any changes to a funding model, it will mean you have some people who pay less and some who pay more so we will have to look at how fair that is. We are very conscious of that and want to have a sustainable funding model as we are very aware AFCA is funded by its members and we want it to be fair.”
AUTHOR
Laura Dew
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
