The Australian Financial Complaints Authority (AFCA) opened its gates in November last year. Inaugural chair and former federal Assistant Treasurer Helen Coonan, spoke to us about priorities and challenges in the wake of the Hayne Royal Commission. Coonan will participate in a discussion of ‘The governance of government: Navigating the tensions of governing public sector organisations’ at our 2019 Australian Governance Summit.
What do you see as some of the key priorities for AFCA?
Our aim is for AFCA to be a world-class ombudsman that raises standards, minimizes disputes and restores trust and confidence in the financial services sector more broadly. Our priority is to provide a fair, efficient and independent service to assist parties to resolve disputes and let them get on with their lives.
Since AFCA launched in November 2018, there has been an avalanche of phone calls and complaints. I believe the focus in financial services dispute resolution has shifted from strict adherence to and reliance upon meeting legal obligations as the sole determinant of a dispute, to doing what is right and necessary to treat a customer fairly in all circumstances. Adjusting the interests between a provider and a consumer when warranted to achieve a fair outcome will be at the heart of everything we do.
Preventing disputes arising in the first place is a key priority, through helping members with their own internal dispute resolution systems through education and information. In addition, we’ll pursue a vigorous public awareness and outreach campaign for those who may be disadvantaged by lack of financial literacy – this has been a particular passion of mine since I was the Assistant Treasurer. Since then, I think the need for a program like this for vulnerable people within our communities has not diminished.
What are the reasons for establishing the AFCA?
The AFCA is an idea whose time has come. It has the capacity to be a real game changer in an industry beleaguered by complaints and disenchanted consumers. It was born out of an exhaustive review of external dispute resolution in financial services headed by Professor Ian Ramsay. This review found that existing schemes were at times confusing for consumers trying to navigate multiple schemes, that monetary limits were inadequate and in the case of superannuation, in particular, delays were extensive and unacceptable.
The AFCA is the new one-stop shop comprehensive dispute resolution body, replacing three previous schemes: the Financial Ombudsman Scheme, the Credit and Investments and the Superannuation Complaints Tribunal. It provides a free and independent service for consumers and small businesses with complaints regarding financial services including banking, financial advice, credit and investment, insurance and superannuation.
AFCA is not a regulator, although it has reporting obligations to regulators such as ASIC. We are building on the good work of predecessor schemes, but is a whole new vision for the role of dispute resolution in financial services. We have greater capacity for handling small business disputes, and greater authority to resolve the vast bulk of financial service complains that come to us.
How did your experience as minister prepare you for this new challenge?
I am fortunate to have gained a wealth of experience spanning three careers of law, politics and now in the corporate sector. In Parliament my roles as Minister for Communication, Assistant Treasurer and Minister for Revenue, involved leading multiple stakeholders through major economic reforms and handling complex problems where public policy, consumer and business interests intersect.
Being a minister enabled me to gain extensive experience through high-level decision making in executive government. For example, I held portfolio supervision of the ATO, APRA, and I oversaw policy design and implementation of the new Australian Communication and Media Authority (ACMA). In a corporate sense, this involved the transition of an existing business (ACMA is a converged authority) and handling the formation of a board and a chief executive, succession planning, budget preparation and evaluating the performance of large agencies. I’ve worked extensively with public boards. It’s an exciting experience seeing issues and problems from the other side of the fence!
What are some of the important aspects of managing the relationship between organisation and government?
Managing that relationship can be complex, especially when there may be issues of major national import involved, such as with the financial services Royal Commission. I believe it is important to understand competing priorities. Ministers are primarily concerned with acting in the national interest, which will mean juggling many constituencies against the backdrop of wanting to get re-elected and public expectations. Directors of corporations have, perhaps until recently, a much more clearly defined statutory obligation to act in the interests of shareholders, with business profitability in front and centre.
Profitability must co-exist with the ‘social licence to operate’. Balancing commercial interests with community expectations can be tricky ground when managing a relationship with government, especially if there is a matter in question that where there is no clear consensus.
If you have an issue for government attention, whatever the issue, there are a few ground rules. Understand who are the ministerial decision-makers who will have carriage of the issues relevant to your organisation both in their departments and cabinet. These officials will have charge of the detail and will provide advice to the minister. If you have a matter for consideration that is contentious, think how to build a coalition of cross-party support. Governments and officials change, so it does not work to put all your eggs in one basket.
What trends have you seen emerge over time in public sector governance?
Governance in the public sector is multi-dimensional and faces many similar changes to the private sector. These are no ordinary times. The governance of governing has never been more important. Rapid technological changes, global challenges, security threats, evolving social trends and expectations as well as loss of confidence in major institutions are all contributing to a vastly different landscape in which the Australian Public Service (APS) operates.
These trends call for an APS that is fit for purpose, one that is able to foresee trends and opportunities. The current trend for extensive use of consultants to fill gaps in capability can be no substitute for investment in building and retaining internal capacity. Consultants play an important role in contributing diversified thinking and external expertise, but this should not be at the expense of ‘hollowing out’ internal expertise in the public service, which remains responsible for the quality of advice that governments depend on.
The APS needs to more effectively embrace innovation and digital solutions, as well as other tools now at its disposal, in the design and delivery of policy. Sophisticated predictive data analysis, for example, enables accuracy of information and precision in targeting that could only be dreamt of in estimates a decade ago.
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