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The funding package will expand AFCA’s remit to act as a “single door” of redress for victims.
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Canberra unveils major $14.7m scam compensation pathway
28 October 2024
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The government will direct $14.7 million in funding to the Australian Financial Complaints Authority to establish a “single door” for scam victims to hold social media platforms, banks and telcos liable.
The pathway would be available to all victims who have exhausted internal dispute resolution channels, even if the complaints were against multiple regulated industries.
Assistant Treasurer Stephen Jones hailed the funding as “a major uplift in consumer protections for scam activity”.
“Our scams crackdown will cut off the avenues scammers use to target Australians by setting a high bar for what businesses must do to prevent them,” he said in a statement last week.
“Scam victims will have a clear pathway for redress.”
“We want victims of scams to know the government has their backs, and we want businesses to understand that they have a responsibility to protect Australians from these often devastating scammers.”
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The measure represents a big expansion of compensation avenues for scam victims against large corporations.
The government said that, currently, social media companies have no internal or external dispute resolution mechanism, and redress “is close to impossible.”
The $14.7 million funding package would be allocated over two years to AFCA, which will operate the external dispute resolution scheme under the government’s new scam prevention framework.
It would also operate on top of AFCA’s existing jurisdiction for non-scam complaints concerning financial services.
Recent data showed the financial complaints body reported around 11,000 scam-related complaints out of more than 100,000 total complaints against financial firms in the past financial year.
“Today’s announcement will support the significant expansion of AFCA’s remit involved with, adding scams complaints against telcos and certain digital platforms,” the government said.
Draft legislation for the scam prevention framework was released last month.
The initial reforms force banking, telecommunications and social media businesses to step up their efforts in preventing scams or face fines up to $50 million in a bid to protect small businesses and consumers.
Consultation on the exposure draft concluded on 4 October, with the government now considering the feedback ahead of introducing a bill to parliament later this year.
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