The Australian Financial Complaints Authority (AFCA) has received two separate court decisions which support the scope of AFCA’s fairness jurisdiction in both its superannuation and general divisions, and the approach AFCA has adopted to its decision making.
On Thursday 9 April, the Federal Court handed down its decision on an appeal by QSuper Board (QSuper), over an AFCA superannuation determination. The bench unanimously dismissed the appeal by QSuper with costs awarded to AFCA.
QSuper argued that AFCA had found QSuper breached section 1017B of the Corporations Act and this section required QSuper to give notice of the nature and effect of a significant event. As a result of this, QSuper claimed AFCA had exercised judicial power in contravention of Chapter III of the Australian Constitution.
The Court found that AFCA did not exercise judicial power, noting that on the way to making a determination about fairness and reasonableness, AFCA can make decisions about legal rights, such as compliance with the law or compliance with the trust deed. None of the provisions of the Corporations Act which establish the AFCA scheme and grant AFCA power to make determinations offend the Constitution.
On the same day, the Supreme Court of Queensland dismissed with costs the case brought by Investors Exchange Limited (IEL) seeking judicial review of a AFCA determination.
Investors Exchange Limited argued that AFCA’s determination was not open to the facts and had misconstrued the evidence provided.
The Court found AFCA’s determination was reasonable, had been open to the facts and had correctly interpreted the documentation. The court held that the principles set out in case law involving predecessor External Dispute Resolution (EDR) scheme, the Financial Ombudsman Service, are equally applicable to AFCA. AFCA obtained an order for specific performance to ensure the determination is complied with.
The Honourable Justice Peter Applegarth also confirmed AFCA’s primary duty is to do what is fair in all the circumstances, noting: “It is possible that, having had regard to legal principles, the decision-maker decides to not apply them because the strict application of those legal principles would lead to an outcome which is unfair in all the circumstances.”
Read the more about QSuper Board v AFCA Limited and Lam  FCAFC 55
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- The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent help with financial disputes.
- AFCA is a one-stop-shop for consumers and small businesses who have a dispute with their financial firm, over things such as banking, credit, insurance, advice, investments or superannuation.
- Where an agreement cannot be reached between parties, AFCA can issue decisions that are binding on financial firms.