AFCA now considering legacy complaints dating back to 2008

28 August 2019
Kimberley Arden, Partner, Brisbane

Until June 2020, AFCA can consider certain Legacy Complaints dating back to 1 January 2008 when administering the AFCA external dispute resolution scheme. This may pose evidentiary challenges both in terms of retention of relevant documents and staff recollection of events which occurred over a decade ago. The expansion of AFCA’s jurisdiction also means that AFCA can consider complaints which may otherwise be barred by statutory limitation periods if brought before the courts. Read here to learn more about how the AFCA Rules will apply to Legacy Complaints.

Subject to certain conditions, from 1 July 2019 to 30 June 2020 the Australian Financial Complaints Authority (AFCA) can now consider complaints arising from conduct dating back to 1 January 2008. This follows the commencement of the AFCA Scheme (Additional Condition) Amendment Authorisation 2019 (Cth).

AFCA’s Rules and Operational Guidelines have been amended to reflect this expansion of its jurisdiction.

 

Key concept – what is a Legacy Complaint?

The AFCA Rules define a Legacy Complaint to mean ‘an expression of dissatisfaction, against a current Compulsory Member of AFCA, about loss arising from conduct by a Financial Firm that occurred on or after 1 January 2008‘ which would be considered by AFCA but for the ordinary time limits set out in the AFCA Rules (see rule B.4).

 

When will AFCA consider a Legacy Complaint?

In order for AFCA to consider a Legacy Complaint, the AFCA Rules require the following:

  • The complaint must be submitted to AFCA between 1 July 2019 and 30 June 2020;
  • The conduct complained of must have occurred on or after 1 January 2008. This reflects the time frame considered by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry;
  • A decision/determination has not already been made by a court or tribunal;
  • A decision/determination about the merits of the complaint has not been previously made by a Predecessor Scheme (e.g. the Financial Ombudsman Service), or AFCA;
  • The complaint must not have previously been settled by the Complainant and the Financial Firm;
  • AFCA will not consider Legacy Complaints regarding a superannuation death benefit, or a Legacy Complaint that solely relates to a right or obligation arising under the Privacy Act 1988 (Cth).

Of course, this is in addition to the requirement that the complainant must be eligible to submit a complaint.

 

Which rules will apply?

The AFCA Rules will apply to the Legacy Complaints, as opposed to the rules which governed any predecessor scheme.

Importantly, this means that AFCA may award remedies under the Rules which were not necessarily available under the predecessor schemes.

 

Availability of documentary evidence

The onus to provide information/documents in a Legacy Complaint is the same as other complaints, that is:

  • The complainant has the initial burden to present sufficient evidence and to outline the issues in dispute with specificity. General or vague assertions will not be sufficient; and
  • Once a prima facie claim is established, the Financial Firm is responsible for producing information/documents to establish its position.

The Operational Guidelines make clear that AFCA will generally not draw an adverse inference where a party is unable to produce documents or provide information that it is no longer required to hold.

Interestingly where documentary evidence is not available to support a claim, the Operational Guidelines indicate that:

  • whilst AFCA will try to reach a conclusion based on the weight of the information available to it;
  • if a determination could only reasonably be made by the testing of the parties’ recollection by cross-examination under oath (which AFCA cannot do);

AFCA may exclude a Legacy Complaint on this basis. However, AFCA will not exclude such complaints lightly. This will generally only occur if AFCA considers that it is unable to resolve the complaint fairly in accordance with AFCA’s obligations.

 

Key takeaways

The expansion of AFCA’s jurisdiction to consider Legacy Complaints dating as far back as 2008 seemed inevitable following the Hayne Royal Commission. However, the expansion presents evidentiary challenges for Financial Firms both in terms of retention of relevant documents and employee recollection of relevant events which occurred over a decade ago. The expansion sees AFCA being able to consider complaints which may be barred by statutory limitation periods if brought before a Court.

In addition to understanding the key changes, Financial Firms should consider their information/document retention practices and procedures in order to ensure that they retain, and have available to them, all requisite documentation available to respond to Legacy Complaints.

 


Authored by:

Kimberley Arden, Partner

Tahlia O’Connor, Associate

This update does not constitute legal advice and should not be relied upon as such. It is intended only to provide a summary and general overview on matters of interest and it is not intended to be comprehensive. You should seek legal or other professional advice before acting or relying on any of the content.

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