Following a recommendation from the banking royal commission, the Australian Financial Complaints Authority (AFCA) has amended its rules to allow them to deal with “legacy complaints” lodged between 1 July 2019 and 30 June 2020.

AFCA, the mega-ombudsman scheme, was set up from November 2018 to deal with complaints against financial service providers such as banks, financial advisers, life insurers and superannuation fund trustees.

Its rules set out time limits including that complaints must usually be lodged within 6 years of when the complainant was or should have been aware that they suffered loss or 2 years after an internal complaint decision (whichever is the lesser period).

There is a discretion to extend the time in special circumstances and special rules apply to superannuation complaints.

However, the rules would mean that most complaints about conduct that occurred before 2013 would be outside AFCA’s time limits.

From 1 July, complaints about conduct that occurred as far back as 1 January 2008 can be lodged with AFCA, with a cut-off of 30 June 2020.

Such legacy complaints will still be subject to the normal rules of AFCA, including the monetary limits. Of particular importance is how AFCA will treat legacy complaints that have already been dealt with by a court or tribunal.

In summary, the rules state that AFCA will not deal with a legacy complaint that has previously:

-been decided by AFCA or a pre-deceassor scheme such as the Financial Ombudsman Service (FOS) or the Superannuation Complaints Tribunal (SCT)

-been decided by another Tribunal or a Court

-settled between the parties.

These restrictions may exclude many potential legacy complaints, including some of those highlighted in the Royal Commission, such as decisions or settlements reached after customers had been intimidated or bullied.

It may be possible to assert that a settlement should be disregarded and the complaint re-agitated because the complainant did not receive a fair outcome but it remains to be seen whether AFCA, which has been swamped with more than 40,000 complaints in its first 6 months, will entertain many such complaints.

There is also some doubt whether complaints which had previously been treated as withdrawn by the SCT or excluded by FOS because they found the complaint to be misconceived or lacking in substance can be dealt with by AFCA as legacy complaints.

However, complaints which were previously beyond the monetary limits then in place under the old schemes can be dealt with by AFCA as long as they fall within the monetary limits now in place at AFCA.

One type of complaint that is specifically excluded is superannuation death benefit disputes.

AFCA has indicated it will modify its usual complaints processes to accommodate likely problems with obtaining old documents and they may fast track legacy complaints.

AFCA has been on a hiring frenzy to gear up for the expected influx of complaints, but it remains to be seen how many legacy complaints are lodged and get through the eligibility criteria. There is also the impact of complaint fatigue on long-suffering consumers.

The first months will tell a tale. Buckle up!

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