AFCA forced to change its approach to ARs
The Australian Financial Complaints Authority (AFCA) has been forced by the Australian Securities and Investments Commission (ASIC) to change the way it treats authorised representatives.
AFCA announced to it had amended its rules to provide clarity for consumers and financial firms regarding AFCA’s jurisdiction to receive complaints about the conduct of an authorised representative of an AFCA member, noting that this was a result of a legislative instrument issued by ASIC on 5 January, 2021, requiring AFCA to update its rules.
It said the rules change followed the judgment of the NSW Supreme Court in DH Flinders Pty Limited v Australian Financial Complaints Authority in November 2020 relating to AFCA’s jurisdiction to consider a complaint against a licensee in relation to the conduct of its corporate authorised representative, specifically where the conduct of the representative was without or outside authority.
The AFCA announcement said the judgement had 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.
“At ASIC’s direction, the rules now clearly reflect the same statutory liability for licensees regarding their authorised representatives as set out in the Corporations Act and the National Consumer Credit Protection Act,” it said. “The updated AFCA rules apply to complaints received by AFCA from 13 January, 2021, onwards. “
It said complaints received before 13 January, 2021, will be handled by AFCA under the previous Rules.
“As the vast majority of complaints AFCA considers are between parties with a direct relationship (e.g. a bank to a bank customer) these complaints are not impacted by the rules change,” it said.
“AFCA is currently reviewing a very small number of complaints received before 13 January 2021 which are potentially impacted by the judgment and is in contact with those complainants and financial firms to discuss the specifics of their complaint.”
“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.”
Recommended for you
Following an extraordinary general meeting today, Dixon Advisory parent company E&P Financial Group’s shareholders have voted on its proposed delisting from the ASX.
While overall financial adviser numbers have dipped below 15,500 this week, Rhombus Advisory is experiencing growth and approaching 500 advisers in its ranks.
Iress’ Xplan continues to dominate the financial planning software market with a multitude of uses, according to Netwealth research, despite newer players battling for a piece of the pie.
ASIC has shared the percentage of breach reports related to financial advice in FY24, noting increased reporting by smaller AFSLs.
