AFCA Scheme Amendment (2024 Measures No. 1) Authorisation 2024

Overview

The AFCA Scheme Amendment (2024 Measures No. 1) Authorisation 2024 was enacted to address certain gaps and issues within the Australian Financial Complaints Authority (AFCA) scheme by amending the AFCA Scheme Authorisation 2018. This authorisation was made by Stephen Jones, the Assistant Treasurer and Minister for Financial Services, under the Corporations Act 2001. One of the key policy objectives of this amendment is to ensure that AFCA and its decision-makers do not make decisions on complaints in specific circumstances, particularly where a decision in favour of the complainant would require a member of the scheme to pay an amount they are unlikely to fully pay. This is particularly pertinent in cases involving credit activities, financial product advice, and dealing in securities where the member was not authorised to provide or engage in such activities at the relevant time. The amendment aims to prevent decisions that could impose financial obligations on members who are unlikely to meet them, thereby safeguarding both the members and the integrity of the AFCA scheme.

Scope and Application

The AFCA Scheme Amendment (2024 Measures No. 1) Authorisation 2024 applies to the Australian Financial Complaints Authority (AFCA), specifically modifying the authorisation of the AFCA scheme. This authorisation imposes a condition on the AFCA and AFCA Decision Maker, prohibiting them from making decisions on certain complaints under the scheme if specific criteria are met. This condition applies to complaints related to credit activities, financial product advice, and dealing in securities, particularly where the member involved was not authorised to provide such services or products at the relevant time, and there are no exceptional circumstances warranting a decision. The authorisation extends to all entities and persons involved in financial services within the jurisdiction of Australia, encompassing various industries such as banking, insurance, and financial advisory services. The jurisdictional reach of this amendment is national, as it is made under the Corporations Act 2001, which has a federal scope. The authorisation does not explicitly state any exclusions, exemptions, or thresholds, though it does specify that the condition applies to both existing unresolved complaints and new complaints made after the commencement of this amendment. The application and specifics of this condition may be further detailed in subordinate instruments or scheme rules, which would need to be amended accordingly.

Key Provisions

The AFCA Scheme Amendment (2024 Measures No. 1) Authorisation 2024I introduces amendments to the Australian Financial Complaints Authority (AFCA) Scheme Authorisation 2018. The amendments, which come into effect the day after the instrument is registered, primarily focus on conditions under which AFCA and the AFC (Australian Financial Complaints Authority) may not make a decision on certain complaints (Schedule 1, Item 1). Specifically, Section 4 of the AFCA Scheme Authorisation 2018 is amended by adding definitions for "Australian credit licence" and "dealing", clarifying the terms used within the scheme (Schedule 1, Items 2 and 3). Additionally, a new Section 9A is inserted, imposing a condition on the authorisation that AFCA and the AFC must not make a decision on complaints where certain criteria are met, such as the complainant’s inability to pay the required amount and the member’s lack of authorisation to provide the relevant services or products (Schedule 1, Item 4). The obligations imposed by this authorisation on AFCA and the AFC include ensuring they do not make decisions on complaints that fall under the specified conditions outlined in Section 9A. This involves assessing whether the complainant is likely to fully pay any required amount and whether the member was authorised to provide the relevant services or products at the time of the complaint. Additionally, AFCA and the AFC must not proceed with complaints that meet all the conditions set out in Section 9A, unless there are exceptional circumstances that warrant a decision (Schedule 1, Item 4(1)). They must also disregard any limitations on a representative placed by a licensee, other than those covered in a licence, when determining authorisation (Schedule 1, Item 4(2)). The authorisation further clarifies that this condition applies to both existing complaints and those made after the commencement of this section (Schedule 1, Item 4(3)). Failure to comply with the conditions set out in Section 9A could result in significant consequences. Although the authorisation does not explicitly detail specific offences, penalties, or consequences for breaches, non-compliance could lead to legal challenges or regulatory action under the Corporations Act 2001. The authorisation is made under this Act, and any breach of its conditions could potentially lead to penalties as prescribed by the Act or through other relevant legal mechanisms. The precise penalties for such breaches are not specified in the authorisation but could include fines, corrective actions, or other regulatory measures as determined by the relevant authorities.