AFCA urged to tighten up on consumer complaints

Mike Taylor

Managing Editor and Publisher

22 May 2023

Consumers should be made to prove they have actually had a valid relationship with a financial services company before their complaint is accepted for handling by the Australian Financial Complaints Authority (AFCA) and visiting a company’s web site should not count.

That is the view of the Association of Securities and Derivatives Advisers of Australia which has used a submission to tell AFCA that for the system to work, those making the complaint should be required to validate the existence of a relationship.,

In circumstances where AFCA is looking for feedback on proposed changes to its Rules and Operational Guidelines, the ASDAA consumers making a complaint should be required to demonstrate that they had a relationship with the financial firm and that the financial firm actually agreed to provide financial services to them.

“In the past AFCA has accepted complaints from people who have alleged that a financial service has been provided to them without the need of that person to demonstrate and/ or prove that the Financial Firm has agreed to provide such financial service to them,” the submission said.

“For the complaints resolution service to be taken seriously and to be fit for purpose the first step in the process is for the person making the complaint to demonstrate that a financial service has been provided to them by a Financial Firm as agreed to between them and the Financial Firm.”

“Just by going to a Financial Firms website or going to a conference where a Financial Firm is represented does not mean that a financial service has been provided to a person by the Financial Firm, nor that the person is a client of the Financial Firm,” the ASDAA submission said.

It said that this represented a critical point and would increase efficiency in the AFCA complaints resolution process.

“Another scenario arises where the person claims to have dealt with a financial service provider that is authorised by multiple AFS Licensees and as part of the complaints resolution process AFCA initiates a complaint against all the authorising AFS Licensees.

“To avoid this additional step, AFCA should work with the client to establish who the authorising licensee is and which Financial Firm the complaint is against. Simply asking a person to provide a copy of an FSG they had received at the time or the contractual agreement they entered into at the time is not unreasonable in order to establish the correct Financial Firm the complaint should be lodged against,” the submission said.

“We understand that this may not be possible in all circumstances but AFCA should be encouraging clients via the consumer advocacy groups to maintain good records themselves. This would naturally expedite the process.”