Australian Financial Complaints Authority's (AFCA) 'Look Back' program will investigate and review ‘legacy’ complaints. From 1 July 2019, Australian consumers and small businesses (fewer than 100 employees) will be able to seek redress for eligible financial disputes dating back to 1 January 2008 by lodging a complaint with AFCA. AFCA will be reviewing these complaints for a 12 month period with the possibility it may be extended. Complaints dealt with previously by AFCA or any of its predecessor schemes, courts or tribunals will not be eligible for the 'Look Back' review.
What is a legacy complaint?
- In this instance, it is a complaint about misconduct of a financial firm that occurred on or after 1 January 2008.
- The financial firms must be an AFCA member and can include banks and other credit providers, financial planning firms, general insurers, insurance broking firms, life insurers, superannuation fund trustees and RSA providers, stock broking firms and fund management companies.
- Misconduct includes acts or omissions by a financial firm that has resulted in a loss sustained by the eligible complainant.
Who can submit a legacy complaint?
- A complainant must be an eligible person at the time they submit the complaint to AFCA, even if they may not have been an eligible person at the time of the misconduct or did not have the right to pursue their complaint.
- For example, a complainant (now an adult) may submit a legacy complaint about conduct in respect of his bank account in 2008 (when he was seven years old). Or, a current director of a company may submit a legacy complaint on behalf of the company, even though she was not a director at the time of the misconduct.
How will AFCA deal with the legacy complaint?
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AFCA is encouraging legacy complaints lodged that have not previously gone through the Internal Dispute Resolution (IDR) process to be referred back to the financial firm in the first instance.
- AFCA will start investigating matters from 1 October where financial firms have been unable to satisfactorily resolve the complaints and standard timeframes in managing AFCA complaints will generally apply.
- Due to the potential complexity of some of these complaints and the number of years that have passed since the issues occurred, AFCA may adopt different approaches when dealing with legacy complaints on a case-by-case basis, including:
- the referral timeframe when AFCA first receives a legacy complaint may be varied;
- they may refer more legacy complaints to conciliation conferences more frequently, and
- they may refer legacy complaints to decision stage if a resolution cannot be achieved promptly by way of agreement.
What's next?
- In the first five months of AFCA's commencement (1 November 2018 – 31 March 2019), the majority of complaints have been regarding credit (45%) and general insurance (22%) products.
- AFCA is continuing to raise awareness about its services and this may result in more people coming forward with complaints.
- When dealing with customer complaints, there is the expectation that financial firms will not just comply with the 'letter of the law' but will look at the whole customer experience, including timeliness of responses, transparency of processes and frequency of communication.
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The 'Look Back' initiative will impact financial firms in a number of ways, including :
(i) resourcing and managing the volume of potential complaints,
(ii) the need to develop and maintain a compliant IDR system
(iii) training and development of IDR staff
(iii) efficiently identifying and accessing historical documents and data via legacy systems
(iv) compliance with Privacy regulations
(v) compliance with General Code of Conduct (General Insurers only)
(vi) identifying and addressing systemic issues
(vii) governance and reporting
We encourage you to contact the authors below for a health check of your current Complaints handling and Dispute Resolution policy and IDR terms of reference and complaints processes to help you meet the expectations of AFCA and the potential impact of 'Look Back' review program. Our experience in developing governance, risk, regulation and compliance solutions for financial firms ensures we are well-placed to help you address and mitigate potential issues that may arise as a result of AFCA's 'Look Back' program.