Compliance, Financial Planning

AFCA rules amended after court ruling

AFCA rules amended

The Australian Financial Complaints Authority (AFCA) has changed the rules under which it operates with regard to receiving consumer complaints about the conduct of authorised representatives of its member organisations.

An Australian Securities and Investments Commission (ASIC) legislative instrument issued on 5 January necessitated the amendment and arose after a New South Wales Supreme Court decision handed down in November last year.

In the case of DH Flinders Pty Limited v Australian Financial Complaints Authority, the court determined AFCA has no jurisdiction to handle a complaint against the authorised representative of an Australian financial services licence (AFSL) holder where they have allegedly acted outside their authority.

According to AFCA, the judgment meant its rules needed to be clearer to guarantee they stipulate AFSL holders and their authorised representatives have the same obligations and liabilities as determined by the Corporations Act.

As such, rule changes have been made binding licensees and their authorised representatives to the requirements of the Corporations Act and the National Consumer Credit Protection Act.

The changes to the rules come into effect from 13 January and any complaints lodged with AFCA before this date will be processed under the previous operational procedures.

According to the consumer body, the vast majority of complaints it has received prior to 13 January will not be affected by the rule changes and those that are impacted are currently being managed.

“AFCA is currently reviewing a very small number of complaints received before 13 January 2021 which are potentially impacted by the judgment and is in contact with those complainants and financial firms to discuss the specifics of their complaint,” it said.

“For the small number of complaints which may be outside AFCA’s rules, AFCA will be encouraging the financial firms involved to consent to AFCA considering the complaint to achieve an early resolution and avoid the prospect of potential court or other action by the complainant.”

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