The FPA has raised concerns about AFCA’s legacy complaints rule changes and the impact it would have on the industry.
The Financial Complaints Authority has proposed new rules that would expand its jurisdiction to deal with eligible complaints about conduct dating back to 1 January 2008.
In a submission to AFCA on the changes, the Financial Planning Association of Australia supported the intent of the measure but raised concerns about whether professional indemnity costs would cover legacy complaints reaching back more than 10 years.
The FPA sstated that it was important for consumers to have their complaints heard, but chief executive Dante De Gori said the new rule changes were unclear.
“It is unclear whether the consideration of the AFCA ombudsmen will be based on the law, codes, guidance and good industry practice available at the time the conduct occurred, rather than the current standards,” he said.
Mr De Gori said the association was concerned that PI policies would not cover potential legacy complaints and that would have a significant impact.
“If PI cover does not extend to legacy complaints under the conditions set in the proposed rules change, this will have a significant impact on the ability of licensees to pay any determinations made by AFCA in relation to legacy complaints,” he said.
The FPA told AFCA in its submission that the issue warranted urgent consideration and further investigation by AFCA with the professional indemnity insurance industry.
“Initial feedback from the insurance industry indicates that PI cover may be more expensive in the future should there be an increase in claims arising in relation to legacy complaints,” said Mr De Gori.
“This may include complaints that may have fallen outside the jurisdiction of predecessor schemes as set in the terms of reference applicable at the time the conduct occurred, which may now be accepted under the AFCA rules as at 30 June 2019.”
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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