New authority to hear financial complaints

Legislation to establish a one-stop-shop ombudsman to hear allegations of dodgy practices by banks and other financial institutions has cleared the Senate.

The Australian Financial Complaints Authority - a measure announced in the May budget - will replace three existing bodies and aim to fast-track disputes which are often dealt with in a drawn-out process.

Establishing the authority was one of the government's attempts to get tougher on the financial sector in response to calls for a royal commission.

The legislation passed the upper house on Wednesday, but since it was introduced in parliament, Prime Minister Malcolm Turnbull has backed down on his previous opposition and agreed to hold a royal commission after some Nationals MPs attempted to establish a separate inquiry.

Finance Minister Mathias Cormann says the new ombudsman will provide fair and efficient dispute resolution and give consumers who had wrongfully suffered a loss, access to compensation.

"All financial firms will be required to be members of AFCA by law, and decisions made by AFCA will be binding on them," Senator Cormann said.

Labor opposed the abolition of the existing Superannuation Complaints Tribunal, a statutory authority to be replaced by the privately-run AFCA.

"In abolishing the Superannuation Complaints Tribunal, the bill is much more than a rebranding exercise. Labor believes this will weaken protections and outcomes for consumers," Senator Doug Cameron said.

The Credit and Investments Ombudsman and the Financial Ombudsman Service also will be scrapped.

Under the new regime, the Australian Securities and Investments Commission will be allowed to publish dispute resolution data, effectively giving it the power to name and shame shonky operators.