ASIC urges continuing complaints despite AFCA pause
The Australian Securities and Investments Commission (ASIC) has admitted it has been encouraging people to file complaints with the Australian Financial Complaints Authority (AFCA) because if they fail to do so they risk missing out on the benefits of the yet to be legislated Compensation Scheme of Last Resort.
In doing so, ASIC had encouraged the filing of the complaints despite AFCA having signalled that it had “paused” filing complaints against insolvent firms.
Answering questions on notice from a Parliamentary committee, ASIC directly referenced investors in the troubled Sterling group of companies.
“Taking into account this latest advice from AFCA, ASIC remains of the view that it is in the interests of investors in the Sterling Group of Companies to continue to lodge and maintain complaints with AFCA, as it is only by doing so that such investors could be considered for compensation under any potential future Compensation Scheme of Last Resort that is ultimately able to be established,” ASIC said in its answer.
For its part, AFCA had acknowledged that the Government’s focus on dealing with the COVID-19 pandemic had put in question precisely when its promised Compensation Scheme of Last Resort would be established.
“Until there is certainty provided about the scope and timing of the Compensation Scheme, AFCA has reviewed and put in place appropriate arrangements for dealing with any complaints it receives against insolvent financial firms,” it said. “AFCA will put a pause on processing complaints against insolvent firms, this includes existing and new complaints. AFCA will accept future complaints about insolvent financial firms, but we will hold them over until there is more clarity about the Compensation Scheme, and the parameters of the scheme.”
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