AFCA Legacy Complaints - 5 things you should know

Here are 5 key things that every Financial Firm and consumer who thinks they may have a Legacy Complaint should know.

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ONE: CONDUCT THAT OCCURRED BEFORE 1 JANUARY 2008 MAY BE CAPTURED.

The new AFCA rules provide that AFCA will not consider a Legacy Complaint about “conduct that occurred and ended before 1 January 2008″.

This could open the door to AFCA considering conduct that occured well before 1 January 2008 if there is a causal link between prior conduct and the conduct complained of after this date, or if it was part of a course of conduct.

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TWO: AFCA WILL GIVE FINANCIAL FIRMS UNTIL 1 OCTOBER 2019 TO RESOLVE LEGACY COMPLAINTS BEFORE IT STEPS-IN.

AFCA Chief Ombudsman and CEO David Locke has confirmed that AFCA will accept complaints from 1 July 2019 and then follow its usual practice of referring them back to the financial firms to resolve them, giving them until 1 October 2019 to do so before it steps in.

Mr Locke’s “expectation” is that firms will proactively resolve the legacy matters themselves, as part of Financial Firms’ commitment to remediate the misconduct of the past and meet the community’s expectations of fairness.

However, if firms are unable to satisfactorily resolve the complaints, AFCA will step in.

The message being communciated is that AFCA expects firms to be proactive and reasonable in seeking to resolve the dispute. In other words, FSPs should not expect a smooth ride if and when AFCA steps-in and begins implementing its processes towards resolution.

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THREE: LEGACY COMPLAINTS THAT WERE PREVIOUSLY “DEALT WITH” BY A COURT OR AFCA ARE EXCLUDED.

AFCA will not consider a Legacy Complaint in relation to which a decision or determination has been made by a court, or to which a decision or determination about the merits of the complaint has been made by AFCA (or one of its predecessor schemes – e.g. FOS, CIO, the SCT).

This could raise interesting questions about how these Court or AFCA decisions impact valid Legacy Complaints.

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FOUR: LEGACY COMPLAINTS RELATING TO DISPUTES OTHERWISE PREVIOUSLY SETTLED SHOULD BE EXCLUDED.

AFCA will exclude Legacy Complaints that have previously been settled by the complainant and the Financial Firm to which the complaint relates (other than a complaint that can still be made under the existing AFCA Rules).

In other words, previously settled Legacy Complaints are out, but this does not affect complaints about conduct that occured within AFCA’s normal timeframe for consideration of six years.

This raises some interesting legal questions about how AFCA should treat complaints about conduct that, say, came to light during the Financial Services Royal Commision, but the complainant did not know about when they signed up to settlement terms.

Financial Firms should consider whether the releases given by consumers in existing settlement deeds relate to existing, unknown and future claims, or are more limited in their scope.

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FIVE: ONLY COMPULSORY MEMBERS OF AFCA ARE AFFECTED.

The new AFCA rules clarify that Legacy Complaints will only apply to a Compulsory Member, which means a Financial Firm that is required or obligated to hold membership of AFCA, rather than having joined the AFCA scheme voluntarily.

The new AFCA rules (which relate specifically to Legacy Complaints) state that in the event of some inconsistency with the other sections of AFCA rules, the new rules will prevail. This would suggest that, unlike other types of AFCA disputes, parties cannot voluntarily agree to have AFCA determine a Legacy Complaint.

See the new AFCA Rules on Legacy Complaints for more: https://www.afca.org.au/about-afca/rules-and-guidelines/rules/

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