New legacy rules, designed to expand AFCA’s jurisdiction, have been approved by the corporate regulator.
The Australian Securities and Investments Commission (ASIC) has approved changes to the Australian Financial Complaints Authority (AFCA) Rules, designed to give expanded access to the scheme for consumers and small businesses that were harmed by financial misconduct, dating back to 1 January 2008.
The rules, which are mandated as part of the authorisation condition introduced by government on 19 February 2019, will enable AFCA to deal with certain complaints about conduct by current member financial firms, which AFCA, its predecessor schemes, courts or tribunals have not previously dealt with.
The new rules require that an eligible legacy complaint:
ASIC approved these rules in accordance with legislative requirements in s1052D of the Corporations Act, which require AFCA to seek ASIC approval of material changes to the scheme.
The financial complaints body has also released updated operational guidelines, which give further guidance on how AFCA will deal with legacy complaints.
ASIC has noted that if the new jurisdiction raises “novel issues” about how AFCA deals with complaints that require or necessitate material changes to the scheme, it will review them as part of its ongoing oversight role.
AFCA has welcomed ASIC’s approval of the new rules, which come into effect from 1 July 2019,
AFCA Chief Ombudsman and CEO David Locke said the new rules provide complainants with the opportunity to have their matters independently reviewed.
“We have identified thousands of complaints that could potentially be made to AFCA, based on those that were lodged but deemed outside the jurisdiction of previous schemes,” he said.
“However, there will also be many matters that were never lodged with the Financial Ombudsman Service, the Credit and Investments Ombudsman or the Superannuation Complaints Tribunal that may now be brought to us.”
“We also expect that these matters are likely to be highly complex, and further complicated by the number of years that have passed since the issue occurred.”
Mr Locke called on financial firms to “proactively” resolve legacy matters internally where possible, as part of their commitment to “justly remediate the misconduct of the past and meet the community’s expectations of fairness”.
He concluded: “Where firms are unable to satisfactorily resolve the complaints, AFCA will start investigating these matters from 1 October 2019.”
[Related: Law firm slams ‘inequitable’ AFCA reforms]
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