AFCA Amends Rules, Clarifies Its Jurisdiction to Receive Complaints

The Australian Financial Complaints Authority (AFCA) announced today that it has amended its Rules to give consumers and financial firms clarity about the agency's jurisdiction to deal with complaints about the conduct of an authorised representative of its member, following ASIC direction.

On 5 January 2021, the Australian Securities and Investments Commission (ASIC) issued a legislative instrument requiring AFCA to update its Rules. AFCA is governed by a set of Rules approved by ASIC, pursuant to the requirements of the Corporations Act 2001.  

ASIC's requirement has a lot to do with the judgment of the NSW Supreme Court in DH Flinders Pty Limited v AFCA in November 2020. This case involved AFCA's jurisdiction to consider a complaint against a licensee because of the conduct of the licensee's corporate authorised representative. The debate centred specifically around where the conduct of the representative was without or outside authority. 

The Court's judgment stressed that AFCA's Rules needed to be with greater clarity to ensure that the obligations and liabilities for licensees they reflected are the same as those set out in the Corporations Act.

The amended Rules now clearly reflect licensees' statutory liability in relation to their authorised representatives, in accordance with the Corporations Act and the National Consumer Credit Protection Act. 

Complaints received by AFCA from 13 January 2021 onwards will be handled subject to the updated AFCA Rules. The previous Rules will continue to apply to complaints received before 13 January 2021. Complaints that are between parties with a direct relationship will not be impacted by the Rules change. 

​AFCA encourages the financial firms involved in existing complaints which may be outside AFCA's updated Rules to consent to AFCA considering the complaint to achieve an early resolution so that they may avoid the prospect of potential court or other action by the complainant.