Unfortunately, it is not uncommon for financial institutions to deliver inadequate advice, unfit insurance policies, or simply insufficient services to their paying customers, which has recently been exposed in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Startling discoveries from within prominent companies has since led to a variety of new services dedicated to helping consumers reclaim the fees paid in relation to these practices but even this hasn’t been without controversy. The National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021 has been introduced to protect consumers wrongly charged in the first place by banks, superannuation funds, insurers and more, from engaging with inexperienced, unqualified debt management companies chasing profits instead of directing their efforts to helping their customers obtain due refunds. The Australian Securities and Investment Commission (ASIC) have partnered with the Australian Financial Complaints Authority (AFCA) to ensure debt management companies engaging in these new credit activities are licensed members meeting certain criteria. In this article, the team at Get My Refund explain why this is a crucial move to secure more security within the industry.
Why Debt Management Companies are Required to be AFCA Members
Previously unregulated, the services of chasing down & negotiating refunds from financial institutions on behalf of clients has now been deemed as ‘credit activity’ to prevent unethical practices. This means as of July 1st, 2021, debt management services conducting these services must hold an Australian credit licence and an AFCA membership.
AFCA is an organisation established to hear the complaints of consumers against financial firms within their membership guilty of misconduct and place them subject to applicable rules and jurisdiction. Working in partnership with ASIC (who distribute the credit licensing mentioned above) allows AFCA to enforce members meet the ‘fit and proper person’ test, as well as greater accountability in conduct their services with an efficient, honest, and fair manner, ultimately delivering the optimal services to end consumers.
Potential Risks of Working with an Unlicensed Debt Management Company
Consumers wronged by financial institutions can often become very emotionally invested in retrieving the money previously handed over, which, sadly, drives many to work with unlicensed debt management companies. This exposes them to a range of potential risks, including high fees and operational practices that are far from ‘ethical, honest or fair’. When initially hired to help with their issues, consumers find these unchecked, unregulated debt management companies to only compound their expenses and stress in an already strained period. Therefore, it is crucial to ensure you are working with a licensed debt management company with a current AFCA membership.
How to Make Sure a Business is Licensed Correctly
Engaging in procedures to receive a due refund can be an overwhelming task, especially when this includes the additional administration of finding (and verifying) an appropriately licensed partner. Fortunately, AFCA offers a free, user-friendly tool that allows you to confirm whether an organisation is an AFCA member. Simply enter their name, ABN/ACN, or membership number they have provided you, and review the results displayed below. A quick and easy process for some real peace of mind!
Get My Refund – A Proudly Licensed AFCA Member
After explosive findings in the Royal Commission shone a light onto the foul dealings conducted by many in the financial sector, the new regulations enforced by ASIC and AFCA, especially in relation to debt management companies, brings an exciting period for honourable providers to help more people in need.
Get My Refund was established to deliver meaningful solutions to consumers wronged by financial institutions, which is why we are all in favour of these initiatives. We have been a proud AFCA member since the beginning, conducting constant internal reviews and operational practices to ensure we work in the best interest of our clients, with appropriate fees only payable upon the successful receipt of a refund for:
- Junk Insurance
- Superannuation Fees
- Irresponsible Lending Refunds
- And more
Speak to Our Specialists Today to Learn More
If you have been a victim of irresponsible lending, undelivered financial advice, or other unjustly charged fees, our specialists at Get My Refund would love to see how we can help. Contact us today by calling (02) 9156 1000.