On 1 July 2024 AFCA released a new version of its Rules and Operational Guidelines. The new Rules will apply to complaints lodged on or after this date.  

The updated Rules and Operational Guidelines includes a suite of changes arising from the recommendations outlined in Treasury’s 2021 Independent Review of AFCA (IR Recommendations).  

AFCA undertook consultation in relation to proposed changes to the AFCA Rules and Operational Guidelines between March and May 2023, ASIC approved the changes in early 2024. You can read more about the consultation and AFCA’s response here.  

The changes address key themes from the Independent Review, in particular the need to ensure an efficient process delivering procedural fairness; support for genuine and good faith engagement with our processes; balance in the exercise of our discretions and ensuring the safety and wellbeing of our staff and participants. AFCA also took the opportunity to strengthen the operation of its fairness jurisdiction arising from its 5 years of operation.

 

Managing inappropriate or unreasonable conduct within the scheme

AFCA has strengthened its ability to manage unreasonable or inappropriate conduct within the scheme from complainants and Paid Representatives.

Dealing with appropriate settlement offers

AFCA has expanded existing Rule A.8.3 to include the discretion to cease consideration of a complaint where the financial firm has made the complainant an appropriate settlement offer but the complainant has not accepted or agreed to it.

 

Dealing with previous settlement agreements

AFCA has enhanced the clarity and transparency to its longstanding approach to exclude a complaint that has been the subject of a previous full and final settlement between the parties (except where special circumstances apply).

 

Sophisticated or professional investor complaints

AFCA has clarified its existing approach to the exercise of discretion under Rule C.2.2j), noting that AFCA will generally exclude complaints from sophisticated investors and professional investors (within the meaning of those terms for the purposes of Chapter 7 of the Corporations Act), unless there is evidence that they had been incorrectly or inappropriately classified.

Forward Looking Review mechanism

AFCA has enhanced the visibility, accessibility and independence of its Forward Looking Review mechanism, this is described in the Operational Guidelines to the Rules at A.15.

Clarifying the effect of Determinations

AFCA has clarified in Rule A.15.3b) that where a complainant does not accept a Determination neither the complainant or the financial firm are bound by AFCA’s decision.

Clarifying the slip rule

AFCA has set out in Rule A.14.6 the circumstances in which a Determination may be re-issued because of an accidental typographical error or omission. This amendment is consistent with AFCA’s current practices and confirms that the ‘slip rule’ is not a mechanism for AFCA (or the parties to request AFCA) to re-open a Determination for substantive revision.

Consistency of language about AFCA’s monetary limits

AFCA has amended the wording and tables in Rule D.4 to confirm that AFCA’s monetary and compensation amount limits apply per claim. This is consistent with AFCA’s current approach. For further details about what a claim is please refer to the AFCA Approach to Identifying a claim.

Clarifying the objection process for Rule A.8.3 and A.8.4

AFCA may cease consideration of a complaint under Rules A.8.3 and A.8.4 in certain circumstances, complainants will generally have the opportunity to object to these assessments. AFCA has set out the objection process in full for these assessment in Rules A.8.5 and A.8.6.

Additional AFCA Panel examples

AFCA has included additional examples in its Operational Guidelines of when a banking and finance or small business complaint may be decided by an AFCA Panel.

Updated definition of Financial Service

AFCA has amended its definition of Financial Service to include debt management assistance and credit reporting assistance, this is in line with recent legislative change.

Annual reporting

AFCA has amended Rule A.20.1 to specify that AFCA’s Annual Report must meet AFCA’s obligations to regulators.

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