In November 2020, the NSW Supreme Court handed down its judgment regarding DH Flinders Pty Limited v Australian Financial Complaints Authority (AFCA).
This case related to AFCA’s jurisdiction to consider a complaint against a licensee in relation to the conduct of its authorised representative, and specifically whether the conduct related to a service that was within the authority of the representative to provide.
AFCA is currently in communication with complainants and financial firms about complaints which are impacted by the judgment.
Complaints lodged from 13 January 2021 onwards are not affected because of a change to our Rules.
For more information, please read the DH Flinders Pty Limited v Australian Financial Complaints Authority Current Matter.
AFCA has reviewed 19 complaints against Libertas and, after careful consideration of each case, has assessed 15 as being outside AFCA’s Rules, given the DH Flinders ruling. A further 3 complaints have been found to be partly covered by the Rules. The complaints partially within our jurisdiction will now be progressed.
AFCA acknowledges that those who have been told their complaints are outside our jurisdiction, or only partly covered, will be disappointed. AFCA understands this situation is difficult for those people. We have supported them with information on other assistance that may be available to them.
Complainants who AFCA has assessed as now being outside its Rules have 30 days to object to the assessment. They will need to provide new and relevant information to support that objection.
We have advised complainants that an assessment that a complaint cannot be considered by AFCA only applies to the complaint at AFCA. It does not affect other options they may have.
In our communications with complainants we have recommended they seek independent legal advice about all their options.
Importantly, any complaint that falls outside AFCA's Rules can still be considered by AFCA if the financial firm involved consents for that to happen (See Rule A4.7 in AFCA’s Rules, here ).
AFCA has previously sought Libertas’s consent for AFCA to handle complaints that fall outside our jurisdiction, to help achieve a prompt resolution for both sides. We have now repeated our request for Libertas’s consent to handle these complaints. To date Libertas has not provided consent.
Our previous Sterling group update was 24 August 2020. This November 2020 update should be read together with the previous updates.
This update provides:
- details of ASIC’s most recent Sterling update
- information for consumers who have not yet lodged an AFCA complaint including time limits relevant to lodging a complaint about Theta Asset Management Ltd (in liquidation) (Theta)
- more information for consumers who have a claim against Theta about how to lodge a Proof of Debt with Theta’s liquidators
- general information about how AFCA may approach the issue of loss in misleading conduct complaints at AFCA and
- how we applied our approach in a recent Sterling determination against Theta.
- links to published determinations against Theta and Libertas Financial Planning Pty Ltd (Libertas)
Latest update from ASIC
On 19 November 2020, ASIC provided an update regarding its actions against Sterling Income Trust (SIT) Responsible Entity Theta, and its Managing Director Mr Robert Marie. ASIC advised that the Federal Court in Western Australia found Theta and its Managing Director contravened the Corporations Act on multiple occasions in authorising the issue of five defective Product Disclosure Statements for the SIT. ASIC also advises its investigation into conduct by entities and officers within the Sterling Group of companies continues.
More details are available in ASIC’s media release.
Lodging a complaint with AFCA
Consumers who believe they have received incorrect or misleading information about the SIT or other Sterling group investments from a financial firm, or representative of a financial firm, that is a current AFCA member can lodge a complaint against the financial firm.
In its 2017 update, ASIC advised that Theta was the responsible entity of the SIT. The Investment Manager of the SIT was Sterling Corporate Services Pty Ltd (SCS) formerly known as Acquest Corporate Services Pty Ltd. SCS was a corporate authorised representative of Theta for the periods 9 November 2012 to 10 June 2013, and 31 March 2014 to 17 August 2017. SCS was then a corporate authorised representative of Libertas Financial Planning Pty Ltd from 17 August 2017 to 6 May 2019.
If you want to find out if a particular company is a current AFCA member, you can search on our website or call us on 1800 367 287.
From April 2020, AFCA paused complaints against insolvent financial firms financial firms while awaiting detail of the scope and timing of a Compensation Scheme of Last Resort (CSLR).
On 16 July 2021 the Federal Government released the exposure draft legislation to establish the Compensation Scheme of Last Resort (CSLR).
The establishment of the Compensation Scheme of Last Resort will support ongoing confidence in the financial system’s dispute resolution framework by facilitating the payment of compensation to eligible consumers who have received a determination for compensation from the Australian Financial Complaints Authority (AFCA) which remains unpaid.
Complaints against insolvent financial firms and other complaints that were on pause while awaiting the introduction of CSLR will continue to be paused and will be assessed once the legislation has come into effect.
AFCA will only be able to fully assess the impact of the CSLR to a complaint when details of the scheme are finalised and legislated by the Government. We will review all relevant complaints as soon as that occurs.
AFCA will contact all parties to discuss the status of paused complaint after that assessment is completed.
Read more at afca.org.au/CSLR.
Lodging against Theta
Theta ceased to be an AFCA member on 9 March 2021. Therefore, AFCA can no longer register complaints lodged against Theta.
For complaints lodged with AFCA before 9 March 2021, AFCA remains unable to confirm whether we will be able to progress complaints lodged against Theta because of its insolvency. We will continue to pause complaints until there is more clarity from Government about the Compensation Scheme of Last Resort.
As outlined in our Information when you have a complaint about an insolvent firm fact sheet, if you have a claim against Theta, you should also consider lodging a proof of debt with Theta’s liquidators as soon as possible. This is important so that you do not miss out on the opportunity for your claim to be considered by the liquidator.
Lodging a proof of debt with Theta’s liquidators
Especially given AFCA cannot confirm whether we will be able to deal with complaints lodged against Theta because of its insolvency, if you have a claim against Theta, you should also consider lodging a proof of debt with Theta’s liquidators as soon as possible. This is important so that you do not miss out on the opportunity for your claim to be considered by the liquidator if you do decide to lodge a proof of debt.
For further information about the liquidation and to access the Proof of Debt form, please refer to the Worrells Solvency & Forensic Accounting website or contact Cheryl Huynh on (02) 9249 1220 or email Cheryl.Huynh@worrells.net.au.
More information is in our Information when you have a complaint about an insolvent firm fact sheet.
Assistance to lodge a proof of debt
If you are an individual in Western Australia who needs assistance with lodging a proof of debt with the liquidators and cannot afford a private lawyer, Law Access can assist you. Law Access is a not-for-profit community legal service that can connect you with lawyers who will provide free legal help with the proof of debt process. Please email a completed Application Form to email@example.com. You only need to complete the sections of the Application Form relating to personal details (page 1), a statement about the matter (page3 - where you can state “proof of debt assistance for Theta”) and the permissions and acknowledgements (page 4). If you need any assistance with the Application Form you can contact Law Access on 08 6488 6813 on Tuesdays and Thursdays between 9am to 12 noon WST.
How AFCA approaches loss in misleading conduct claims
We have also provided some general information below that may assist you calculate your claim. This information is based on how AFCA generally approaches the issue of loss when it determines complaints about misleading conduct.
Although you may find this information helpful in considering your own circumstances, each person’s situation is different, lodging a proof of debt is a different process to AFCA dealing with a complaint, and Theta’s liquidators can make their own decisions about how they will assess claims.
AFCA has published on our website AFCA Approaches a series of documents that outline how we approach certain types of financial complaints we receive. Two Approaches are particularly relevant to the Sterling group complaints:
Each complaint is unique in nature, so the information in the Approaches is a guide only.
We have provided a summary of the relevant guidance in these approaches on the How AFCA approaches loss in misleading conduct claims page
This page also includes details of a published determination against Theta awarding compensation to a complainant who had invested in the Sterling Income Trust. We have also now published a determination involving Libertas Financial Planning.
It is important to note that we do not treat previous decisions as precedents. There may be circumstances when a previous decision is not applicable because the facts are somewhat different, or we have changed our approach to a particular class of complaint.