In November 2020, the NSW Supreme Court handed down its judgment regarding DH Flinders Pty Limited v Australian Financial Complaints Authority.
This case related to AFCA’s jurisdiction to consider a complaint against a licensee in relation to the conduct of its authorised representative, and specifically whether the conduct related to a service that was within the authority of the representative to provide.
The judgment highlighted that AFCA’s Rules needed to be clearer to ensure that they reflected the same obligations and liabilities for licensees as set out in the Corporations Act.
Following the judgment, ASIC issues a legislative instrument requiring AFCA amend its Rules to provide clarity for consumers and financial firms regarding AFCA’s jurisdiction to consider a complaint against a licensee in relation to the conduct of its authorised representative.
The updated AFCA Rules apply to new complaints received by AFCA from 13 January 2021 onwards.
AFCA accepted the outcome of the DH Flinders case and worked with ASIC to implement this rules change, rather than appeal the judgment. AFCA did not make this decision lightly and concluded that a prolonged appeals process would likely take months to complete, would not necessarily return a different result, and so would not provide certainty for complainants and financial firms in a timely manner. The Rules change has meant that there is greater clarity for all now, which is consistent with AFCA being transparent and fair, and with the efficient and timely resolution of complaints.
AFCA is currently in contact with complainants and financial firms regarding a number of complaints received before 13 January 2021 to discuss the specifics of those complaints.
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.