AFCA warned against ‘unworkable power grab’

The Australian Financial Complaints Authority’s (AFCA’s) efforts to expand its jurisdiction into scams-related complaints makes it guilty of “an unworkable power grab” to inflate its relevance in a domain outside its expertise, according to Association of Securities and Derivatives Advisers (ASDAA).

In a submission responding to an AFCA consultation paper proposing amendments to the rules, the ASDAA said that while the authority might be well intentioned, AUSTRAC was better qualified to handle such matters.

“While well-intentioned, ASDAA views this as an unworkable power grab by AFCA to inflate its relevance in a domain far outside its expertise and jurisdiction, risking mission creep with negligible impact on scam prevention,” the response said.

“The vast majority of scams are perpetrated by overseas bad actors who are not AFCA members, operating beyond Australian law.

“AFCA lacks not only the legal authority to enforce remedies against these non- members but also the skilled personnel, specialized training, and technological infrastructure required to investigate sophisticated cyber-fraud.

“AUSTRAC, with its dedicated financial crime analysts, global intelligence networks, and transaction-monitoring systems, is uniquely equipped to tackle cross-border scams, a challenge even AUSTRAC finds daunting,” the ASDAA said.

“AFCA’s belief that it can manage scams while delivering on existing responsibilities is unrealistic in the extreme, diverting resources from core dispute resolution and creating false expectations for victims, eroding trust in the process.

“AFCA’s long history of accepting non-client complaints, often contrary to Rule B.2, exacerbates this overreach, exposing members to frivolous claims,” the response said.

It claimed that the complexity of verifying scam complaints could overwhelm AFCA’s resources, which handled 104,203 complaints in 2023-24, straining its capacity to fulfill its duties.

This may justify increased funding requests, raising membership fees for compulsory members, particularly smaller FSPs already burdened by AFCA’s funding model, threatening their viability.

Investigating scams involving offshore banks is further limited by barriers to accessing international financial data, a task requiring expertise AFCA does not possess. Without international cooperation or AUSTRAC’s investigative prowess, AFCA’s efforts risk burdening all members with higher fees and operational costs, with no tangible reduction in scam activity.