Thousands more customers ripped off by banks, insurers, financial planners and superannuation funds will be able to claw back money now that the Australian Financial Complaints Authority (AFCA) has broadened its scope.
AFCA has extended the time period for financial complaints by five years, allowing people who had issues raised in the banking royal commission to be heard. From the beginning of July, AFCA can hear complaints going back to 2008, replacing the 2013 cut-off.
The 11-year time frame for damaging financial practices matches the period covered by the royal commission.
Consumers who have been alerted to issues of misconduct during the hearings have a 12-month window to take their case to AFCA, beginning on July 1 this year and extending until June 30, 2020.
Complaints can include irresponsible lending, misleading products and services, incorrect fees, denial of insurance claims, failure to act in the client’s best interests, claim amounts and much more.
AFCA is the new complaints body that started operating last year. It heard 30,000 complaints and awarded $67 million in compensation to consumers over its first five months to the end of March this year.
A third involved banks, followed by insurers, credit providers, debt collectors and superannuation funds.
AFCA is expecting a huge surge in the number of legacy complaints dating back to 2008.
“We have identified thousands of complaints that could potentially be made to AFCA, based on those that were lodged but deemed outside the jurisdiction of previous schemes,” says David Locke, chief ombudsman and chief executive officer of AFCA.
He says there will be many more complaints that were never lodged with the Financial Ombudsman Service, the Credit and Investments Ombudsman or the Superannuation Complaints Tribunal, the bodies that predated the AFCA.
“We also expect that these matters are likely to be highly complex and further complicated by the number of years that have passed since the issue occurred,” says Locke.
ASIC, the corporate regulator, says it will become involved in cases that are complicated.
“The new jurisdiction may raise novel issues about how AFCA deals with complaints. If these issues necessitate material changes to the scheme, then ASIC will need to review these as part of our ongoing oversight role,” says an ASIC spokesperson.
AFCA has the authority to award large amounts of compensation depending on the type of claim, up to $2 million when dealing with credit disputes, and will have jurisdiction in matters where the credit facility is up to $5 million.
Consumers and small businesses can lodge a complaint with AFCA at afca.org.au, via email to email@example.com or by phoning 1800 931 678.