Under the weight of political pressure, the Government has successfully passed legislation to unify the current Ombudsman schemes into one – the Australian Financial Complaints Authority or AFCA.
As part of the process, QED is advised that Sections 64 and 65 of the Credit Act were considered for change, along with the related Regulation 16 of the NCCP Regulations 2010.
To put that into English for you, the existing requirement is that, prior to authorisation, a Credit Representative must become a member of an approved EDR scheme – currently FOS or CIO – separate from the membership of the Licensee. This is a different situation from that of Authorised Reps under the AFSL legislation.
So that’s a nice earner in fees for the EDR schemes. What do Credit Reps get for this compulsory fee? Well, it seems, very little or nothing. When a complaint is made to the EDRS, the scheme’s investigative process completely circumvents the Credit Rep and goes straight to the Licensee.
The Licensee, meanwhile, has been slugged extra loading on their annual membership fees when the number of Credit Reps increases over stepped thresholds. So, it’s an awesome fee grab.
If the Credit Rep is a Corporate, then the Licensee has two choices – either give that Corporate the authority to sub-authorise the “natural person” (living, breathing humans) Credit Reps; or not give the Corporate that authority and, instead, appoint the natural person Reps directly themselves.
Sounds like a cinch doesn’t it? Why on earth would you give that authority to the Corporate Credit Rep? Even though they’re not allowed to sub-authorise Reps without your permission (in theory), do you really want to invite them to potentially stuff up a very important administrative process?
Well here’s the catch – if you don’t authorise the CCR to make those appointments and you make the appointments yourself directly, then all the employees and Directors of the Corporate also have to have their own, separate EDRS memberships including a separate fee for each person and the CCR.
Non-employed, sub-contractors of the Corporate have to have their own EDRS membership regardless.
Fee grab just got bigger – and for what? Again, the EDRS does nothing for and doesn’t want to involve itself with the Credit Rep. Collecting fees from clients they never intend to serve. Does that sound familiar? Like fees charged to dead people?
So, the opportunity existed in the AFCA Bill to change this situation. QED is told that the legislators considered it – and then put it in the “too hard” bin. Result? Keep paying those EDRS fees and keep being confused about who needs to have a separate membership and who doesn’t under what circumstances.
Doing your head in? Call us on 1300 817 662, we’ll help you to get it straight. We can even complete appointments for you on your behalf (for a fee!) if you need that.