On 1 July 2024 AFCA released a new version of its Rules and Operational Guidelines. The new Rules will apply to complaints lodged on or after this date.
The updated Rules and Operational Guidelines includes a suite of changes arising from the recommendations outlined in Treasury’s 2021 Independent Review of AFCA (IR Recommendations).
AFCA undertook consultation in relation to proposed changes to the AFCA Rules and Operational Guidelines between March and May 2023, ASIC approved the changes in early 2024. You can read more about the consultation and AFCA’s response here.
The changes address key themes from the Independent Review, in particular the need to ensure an efficient process delivering procedural fairness; support for genuine and good faith engagement with our processes; balance in the exercise of our discretions and ensuring the safety and wellbeing of our staff and participants. AFCA also took the opportunity to strengthen the operation of its fairness jurisdiction arising from its 5 years of operation.
Managing inappropriate or unreasonable conduct within the scheme
AFCA has strengthened its ability to manage unreasonable or inappropriate conduct within the scheme from complainants and Paid Representatives.
Under the updated Rules, AFCA has the discretion to cease consideration of a complaint due to unreasonable complainant conduct or Paid Representative conduct that fails to meet our expectations. These discretions are set out in Rules A.8.4(a) and (b).
AFCA will not lightly cease consideration of a complaint and will be careful when dealing with complainants experiencing vulnerable circumstances.
AFCA will also have the discretion to exclude a complainant or Paid Representative from the scheme for a period of up to 6 or 12 months respectively. AFCA appreciates exclusion from the scheme is a serious matter and this discretion will be exercised at an Executive General Manager level in circumstances where it is necessary. This discretion is set out in Rule B.6.
AFCA also has specific expectations for Paid Representatives, these are set out on our website.
Dealing with appropriate settlement offers
AFCA has expanded existing Rule A.8.3 to include the discretion to cease consideration of a complaint where the financial firm has made the complainant an appropriate settlement offer but the complainant has not accepted or agreed to it.
AFCA will exercise this discretion where to do so is fair to both parties. This will be the case where the factual context is straightforward and largely undisputed; where the loss is clear and easily quantified and where continuing in our process would otherwise be unnecessary to achieve a similar outcome.
This change encourages fair settlement of meritorious complaints at an early stage in AFCA’s process, enhancing the timeless and efficiency of AFCA’s complaint handling process.
Dealing with previous settlement agreements
AFCA has enhanced the clarity and transparency to its longstanding approach to exclude a complaint that has been the subject of a previous full and final settlement between the parties (except where special circumstances apply).
A new discretionary rule, C.2.2g) has been inserted to govern when AFCA will exclude complaints of this nature. This rule does not change AFCA’s current practice, as always AFCA will not exercise its discretion lightly and rule C.2.2(g) will not be applied in circumstances where the prior settlement was obtained via unfair conduct including fraud and duress.
Sophisticated or professional investor complaints
AFCA has clarified its existing approach to the exercise of discretion under Rule C.2.2j), noting that AFCA will generally exclude complaints from sophisticated investors and professional investors (within the meaning of those terms for the purposes of Chapter 7 of the Corporations Act), unless there is evidence that they had been incorrectly or inappropriately classified.
Forward Looking Review mechanism
AFCA has enhanced the visibility, accessibility and independence of its Forward Looking Review mechanism, this is described in the Operational Guidelines to the Rules at A.15. Find details here: The Forward-Looking Review Mechanism.
Clarifying the effect of Determinations
AFCA has clarified in Rule A.15.3b) that where a complainant does not accept a Determination neither the complainant or the financial firm are bound by AFCA’s decision.
Clarifying the slip rule
AFCA has set out in Rule A.14.6 the circumstances in which a Determination may be re-issued because of an accidental typographical error or omission. This amendment is consistent with AFCA’s current practices and confirms that the ‘slip rule’ is not a mechanism for AFCA (or the parties to request AFCA) to re-open a Determination for substantive revision.
Consistency of language about AFCA’s monetary limits
AFCA has amended the wording and tables in Rule D.4 to confirm that AFCA’s monetary and compensation amount limits apply per claim. This is consistent with AFCA’s current approach. For further details about what a claim is please refer to the AFCA Approach to Identifying a claim.
Clarifying the objection process for Rule A.8.3 and A.8.4
AFCA may cease consideration of a complaint under Rules A.8.3 and A.8.4 in certain circumstances, complainants will generally have the opportunity to object to these assessments. AFCA has set out the objection process in full for these assessment in Rules A.8.5 and A.8.6.
Additional AFCA Panel examples
AFCA has included additional examples in its Operational Guidelines of when a banking and finance or small business complaint may be decided by an AFCA Panel.
Updated definition of Financial Service
AFCA has amended its definition of Financial Service to include debt management assistance and credit reporting assistance, this is in line with recent legislative change.
Annual reporting
AFCA has amended Rule A.20.1 to specify that AFCA’s Annual Report must meet AFCA’s obligations to regulators.
