Consultation opens on AFCA rules changes

The Australian Financial Complaints Authority (AFCA) — the non-government ombudsman service providing dispute resolution services to individual consumers and small businesses when they are not able to resolve complaints directly with financial firms — has launched a consultation on proposed changes to its official rules and operational guidelines.

AFCA has issued the consultation, which is open until 22 May, following recommendations made by the Treasury’s Independent Review Report in 2021, which put forward 14 recommendations to ensure that the body can develop and improve its procedures as it consolidates its place in the financial system.  

While the 13 proposed changes do not increase AFCA’s jurisdiction or change the scope of the dispute resolution scheme, the recommendations largely focus on clarifying AFCA rules, providing consistency of language, and reducing any ambiguity.

They include:

• Excluding complaints lodged by professional or sophisticated investors unless exceptions apply
• Enabling AFCA to exercise discretion not to consider a complaint from a “paid representative” (acting for a complainant) if they do not have an ACL/AFSL, where required or are not acting in the complainant’s best interests, and excluding them for up to 12 months, where appropriate
• Excluding a complaint, if the nature and subject matter are substantively the same as a previous complaint that has been discontinued
• Excluding a complainant who has submitted one or complaints that AFCA has decided to close or not consider
• Discontinuing complaints because of threatening, intimidating, abusive, bullying, discriminatory, or otherwise unreasonable conduct
• Ensuring only unresolved issues in dispute are progressed and that matters do not progress to case management or decision status, where appropriate offers of settlement have already been made
• Enabling AFCA to decide that it is not appropriate to continue to consider a complaint if the complainant has suffered no loss
• Enabling determinations to be corrected and reissued if there is a clerical mistake or error 
• Minor changes to definitions and language to update certain areas of the rules arising from legislative change, to give greater clarity and transparency of the scheme’s operation overall.

Launching the consultation, AFCA deputy chief ombudsman Dr June Smith said: “AFCA has a significant three-year program of work underway to implement the Independent Review recommendations.

“Our proposed Rules and Operational Guidelines changes are an important component of that program.

“The aim is to ensure AFCA continues to deliver fair, independent, efficient and effective solutions for financial disputes.

“These proposals are an indication of the approach we may take, but we are keen to hear from firms and consumers, whose feedback will help us as we seek to enhance the AFCA scheme.”

The ombudsman service will hold two webinars (on 19 and 27 April) to take stakeholders through the proposed changes in more detail.

Once submissions close on 22 May, AFCA will consider and respond to consultation submissions and feedback and submit proposed changes to the Australian Securities and Investments Commission (ASIC) for approval.

It is expected that the approval process will be finalised by 31 December, and the new Rules and Operational Guidelines will then commence on 1 July 2024.

AFCA had 42,488 financial firm members in 2022 and closed 71,152 complaints in 2021–22. 

Earlier this month, the acting lead ombudsman for investments and advice at the AFCA, Shail Singh, said AFCA received a total of 2,211 complaints related to financial advice in 2022, a majority of which were related to Dixon Advisory.