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Financial products and services

The Australian Securities and Investments Commission (ASIC), is Australian’s corporate, markets and financial services regulator. It is responsible for a range of financial products and services including credit, insurance, superannuation, managed funds and more complex products.

ASIC’s role includes both licensing and ongoing supervision of providers of financial services and credit. If a business or person wants to provide financial services or engage in credit activities, they must be licensed with ASIC or be a representative of someone who is licensed.

For more information see the ASIC website.

Consumer rights in financial servics

Consumers can check basic facts about people, companies, schemes or personal property on ASIC or other government databases. This is an important step before getting financial advice, a loan or credit, buying financial products, or handing over money for a purchase or an investment.

The ASIC lists will confirm whether or not people or companies are licensed to provide credit or financial advice. To check these lists go to the MoneySmart website, or to the ASIC Connect Proefessional Registers.

Note that a licence from ASIC does not mean that ASIC endorses the financial product or advice, or that consumers cannot incur a loss from dealing with them. ASIC grants a licence if a business shows it can meet basic standards such as training, compliance, insurance and dispute resolution, but the business is responsible for maintaining these standards. Checking ASIC’s databases should be only one of the many checks people undertake before investing their money.

Search the Professional Registers on the ASIC website.

Credit and loans

The National Consumer Credit Protection Act 2009 (Cth) provides some important protections for consumers in relations to credit and borrowing.

Credit providers must be licensed and only lend money if they think the credit is suitable for the particular consumer. The responsible lending laws also require the credit provider to make reasonable inquiries about a person’s financial situation, take reasonable steps to verify that person’s financial situation and decide whether the credit contract is ‘not unsuitable’ for that person.

Consumers must be given information such as the lender’s licence number, fees and details of the consumer’s right to complain. Lenders must also provide a fact sheet with credit card applications, containing information about minimum repayment calculations, interest and fees; and lenders may not offer increases in credit limits without the consumer’s consent.

Hot Tip: compare rates, fees and charges

Although the law provides some important protections for consumers, taking time to compare interest rates, features, fees and charges before signing up is a good idea. Even a small difference in the interest rate can make a big difference to repayments over time.

Some common fees and charges include establishment fees, annual charges for credit cards, fees for late or missed repayments, fees for repaying a loan early.

Before locking yourself into a product, you should check the credit contract for all the fees and charges.

Superannuation

Superannuation (‘super’) is a way for people to save for retirement. The money comes from contributions made into each employee’s super fund by employers and, ideally, topped up by the employees’ own money. The Superannuation Guarantee (Administration) Act 1992 guarantees that employers contribute to each employee's' super fund, if the employee is over 18 and earns more than $450 before tax in a calendar month. In the year 2013-14 employers must pay 9.25% of the value of employees’ ‘ordinary time earnings’ into a super fund. This rate will increase gradually to 12% by 2019-20.

People who have had several jobs may have lost track of some of their super entirely. They can find lost super by using the ATO’s free online search tool, SuperSeeker. Logging into SuperSeeker with a tax file number allows people to do an initial search.

See the Australian Tax Office (ATO) website for more information about superannuation contributions.

 

Case study: Lindsay's summer job boosts his super

Lindsay, 17, finished his TAFE studies for the year in November and decided to get a job working in a large department store until the end of December. During the busy period leading up to Christmas he was working every day. As he was earning more than $450 a month and working more than 30 hours per week, Lindsay checked with the payroll manager that he was being paid the super he was entitled to. Lindsay ended up getting $250 put into his super fund. Over time that money will grow as it is invested.

Complaints

What steps can you take if you have a complaint about financial advice, superannuation, managed funds, insurance, credit, loans or bank accounts?

  1. First contact the business with the complaint. They may be able to solve the problem on the spot. If they can’t or you’re unhappy with their response, take the complaint further.
  2. Ask the business for their complaints handling procedure. Write a letter or email, clearly setting out the problem and include copies of relevant documents such as receipts or invoices.
  3. Contact an external dispute resolution scheme. Nearly all financial services businesses must belong to an external dispute resolution (EDR) scheme. EDR schemes hear complaints for free and can be a simpler alternative to resolving disputes in court. The business must tell consumers which scheme it belongs to.

External dispute resolution schemes

There are 3 EDR schemes:

  • Financial Ombudsman Service (FOS) – for complaints about banking, credit, loans and debt collection, life insurance, superannuation, financial planning, insurance broking, stockbroking, investments, managed funds, timeshares, general insurance, finance and mortgage broking.
  • Credit Ombudsman Service Limited (COSL) – for complaints about credit unions, building societies, non-bank lenders, mortgage and finance brokers, financial planners, lenders and debt collectors, credit licensees and credit representatives.
  • Superannuation Complaints Tribunal (SCT) – for complaints about providers of superannuation, retirement savings accounts and annuities. Consumers must contact the trustee of their superannuation fund before going to the SCT.

People can also lodge an online complaint with ASIC.