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AFCA: The new EDR for all Australian forex brokers

The federal executive government of Australia announced it will introduce a comprehensive package of measures to strengthen the accountability and competition in the country’s financial system. These include setting up of a single external dispute resolution (EDR) body for the financial services companies – the Australian Financial Complaints Authority (AFCA).

 

According to a document published on the site of the Australian Treasurer Scott Morrison, AFCA will replace the two existing EDR authorities, approved by ASIC - the Financial Ombudsman Service and the Credit and Investments Ombudsman. All financial firms that deal with consumers, including forex and CFD brokers, will be required by law to be members of AFCA.

 

The task of the new one-stop shop will be to deal with all financial disputes, substantially improving outcomes for individuals and businesses and ensuring that consumers have access to free, fast and binding dispute resolution. The initial plans for AFCA envisage a monetary limit of AUD 1 million and a compensation cap of at least AUD 500,000 for financial disputes.

 

The AFCA will be under the oversight of the Australian Securities and Investments Commission (ASIC), which will require financial firms to report on their internal dispute resolution activity.

 

Australia has become a popular forex hub due to the well-balanced regulation of financial service providers. The Australian watchdog exercises effective supervision and applies certain to licensed brokers such as a minimum capital requirement of AUD $ 1 million, reporting standards and the obligation to keep client money in segregated accounts. The only thing that seems to be missing is a compensation scheme in case a regulated company becomes insolvent.

TAGS: Australia  regulation  ASIC  dispute resolution 

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