AFCA consults on proposed rule changes

The Australian Financial Complaints Authority (AFCA) is seeking submissions on proposed changes to its official Rules and Operational Guidelines – revamps that are aimed at adopting recommendations made in a Treasury review of the ombudsman.

Treasury listed 14 recommendations in its report, released in 2021, to improve the ombudsman’s performance, and AFCA and the Federal Government have said they back the proposed measures. The review is a requirement of legislation that established AFCA in November 2018.

Several of the proposals in the AFCA consultation paper released this week will have a bearing on general insurance complaints.

These include planned changes in relation to paid representatives, complainants, settlement offers and previous settlement agreements.

AFCA is proposing rule changes to define the term “paid representative” following recent law reform. The change will give the ombudsman discretion not to entertain a complaint or to exclude a paid representative from participation where there is inappropriate conduct.

In relation to complainants, AFCA is seeking amendments to provide a “more comprehensive” ability to address unreasonable conduct from a complainant.

The change gives AFCA “new discretion” to stop at any time considering a complaint because of unreasonable complainant conduct, the consultation paper says. The current rules only provide AFCA “some discretion” to exclude a complaint where the complainant is acting inappropriately.

On settlement offers, AFCA is seeking provisions to deal with complaints where an appropriate offer of settlement has been made or where issues in dispute have been previously settled.

AFCA says the measure ensures only unresolved issues are progressed and that matters do not progress to case management or decision status where appropriate settlement offers have already been made.

The current rules do not provide AFCA with discretion to exclude a complaint where a complainant has failed to accept an appropriate settlement offer from the financial firm.

“We consider this conduct is not in keeping with fair, timely and efficient dispute resolution,” the ombudsman says. “This change aims to encourage fair settlement of meritorious complaints at an early stage in AFCA’s process.”

AFCA will hold webinars on April 19 and 27 as part of the consultation process.

The AFCA board expects in September to submit proposed changes for Australian Securities and Investments Commission approval, and by July 1 next year the new rules and operational guidelines should commence.

Closing date for submissions is May 22.

Click here for the consultation paper.