Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWC 285

4 April 2022
Matthew Bode, Partner, Brisbane

In Notesco Pty Ltd v Australian Financial Complaints Authority Ltd [2022] NSWC 285, the Supreme Court of NSW considered the validity of a Determination made by AFCA requiring Notesco Pty Ltd (Notesco) to pay compensation to an elderly resident of France who lost his life savings trading in CFDs (via a third party broker) on Notesco’s platform. The Court ordered the AFCA Determination be set aside on the basis that the required separation between AFCA’s preliminary assessment of the complaint and the Determination stage was not observed.


Mr Jean Pasquier, an 83-year-old who lives in France, opened several trading accounts with Notesco and submitted two Power of Attorney forms that granted a Power of Attorney to Nextrade Ltd (Nextrade) in respect of these accounts. Between 8 May 2019 and 16 March 2020 a total of 6,313 trades were made on these accounts. As a result of these trades Mr Pasquier lost €306,900, which was his life savings. Mr Pasquier subsequently lodged a complaint against Notesco with AFCA.

AFCA Complaint Resolution Process

Preliminary assessment

The AFCA complaint was allocated to Case Manager, Ms May Chng. Ms Chng considered that Mr Pasquier was entitled to compensation for various reasons (primarily because Notesco had failed to adequately address Mr Pasquier’s suitability to trade at the time the account was open) but struggled to consider whether, and to what extent, that compensation should be reduced due to Mr Pasquier’s contributory loss from failure to take reasonable care when dealing with Nextrade.

Ms Chng sought the guidance of her Team Manager, Mr Luke McCoy for his view on the contributory loss issue. Mr McCoy subsequently sought the guidance of Ombudsman, Mr Nicolas Crowhurst for his view on the contributory loss issue, as Mr Crowhurst had recently made a determination on another similar complaint against Notesco. Mr Crowhurst subsequently gave his view that Mr Pasquier had made no contribution to his loss in this case. Following this, Ms Chng issued her recommendation to Notesco, concluding that Mr Pasquier was entitled to a full refund from Notesco.


Notesco advised that it did not accept AFCA’s recommendation and the case proceeded to an Ombudsman for a final Determination. In fact, the case was referred to Mr Crowhurst for Determination and deliberations continued between Mr Crowhurst and Ms Chng as to whether there had been any contributory loss on the part of Mr Pasquier. On 19 March 2021, AFCA issued its Determination, prepared by Mr Crowhurst, in which he ultimately concluded that Notesco was liable, without deduction for contributory loss, for Mr Pasquier’s losses.

Impartiality Issues considered by the Court

The key issue before the Court was whether AFCA failed to comply with is obligations of impartiality, independence and fairness in its complaint resolution process. The Court considered that the complaint resolution process described in the AFCA Rules requires independence and impartiality within AFCA as the process moves from preliminary assessment to Determination. Under the AFCA rules, a preliminary assessment can be prepared by any member of AFCA staff, but a Determination must be made by an AFCA Decision Maker, being an Ombudsman, Adjudicator or AFCA Panel. Furthermore, under AFCA rule A.13.3, when referring a complaint to an Ombudsman or Adjudicator, AFCA’s Chief Ombudsman must consider whether that person will be able to determine the complaint fairly and impartially. As Rees J explained:

“I consider that the AFCA Rules otherwise require that the AFCA Decision Maker will act separately when making their Determination. In particular, the rules do not envisage that the AFCA Decision Maker will have any involvement in the preliminary assessment, nor that those who made the preliminary assessment will be involved in making the Determination. Otherwise, the Determination will not be ‘by an AFCA Decision Maker’. Further, an Ombudsman’s involvement in the preliminary assessment may impede their ability to ‘determine the complaint fairly and impartially’ rule A.13.3.”

The Court did not express any concern with Ms Chng, as a Case Manager, consulting her colleagues as part of her preparation of the preliminary assessment of the complaint. Neither was there any problem with the AFCA staff consulting an Ombudsman in relation to the complaint, provided the complaint was not later referred to the same Ombudsman at the Determination stage. Rather, the Court was concerned with Mr Crowhurst’s involvement in the preliminary assessment of the complaint, as this had the potential to undermine his independence and impartiality at the Determination stage. The Court considered that allocating the complaint to an Ombudsman who had already expressed a view on the preliminary assessment was contrary to the AFCA Rules, and thus whether Mr Crowhurst’s involvement in the preliminary assessment actually undermined his independence and impartiality was irrelevant. It was also problematic that Mr Crowhurst and Ms Chng continued to discuss the complaint at the Determination stage.


The Court concluded that the required separation between AFCA’s preliminary assessment of the complaint and the Determination stage was not observed. The Determination was set aside on this basis and remitted to AFCA to be determined by another Ombudsman who was not involved in the preliminary assessment or Determination.

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Authored by:

Liam Sceriha, Graduate

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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