Planning firms should brace for legacy complaints

18 June 2019

Financial planning firms should brace for the possibility of an influx of legacy complaints, following the Australian Securities and Investments Commission (ASIC) having cleared the way for the Australian Financial Complaints Authority (AFCA) to investigate issues dating back to 1 January, 2008.

The legacy complaints move was announced by the Government in February with ASIC putting the necessary regulatory approvals in place today, prompting AFCA’s chief ombudsman and chief executive, David Locke to suggest that financial planning firms will have first responsibility to deal with the matters via internal dispute resolution procedures.

He said AFCA had a 12-month window to accept and investigate these complaints which must not have been dealt with by AFCA, its predecessor schemes, courts, or tribunals.

Related News:

“AFCA’s ability to consider legacy complaints dating back to 2008 provides people with the opportunity to now have their matters independently reviewed,” he said. “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.”

Locke said AFCA would accept complaints from 1 July 2019 and follow its usual practice of referring them back to the financial firms to resolve them.

“It is our expectation that firms will proactively resolve these legacy matters themselves where possible, as part of their commitment to justly remediate the misconduct of the past and meet the community’s expectations of fairness.

“Where firms are unable to satisfactorily resolve the complaints, AFCA will start investigating these matters from 1 October 2019,” he said.

Recommended for you




Witch hunt, retrospective persecution and application of current community expectations and product design following a Royal Commission and wound back to apply to expectations and product design of more than a decade ago and 5 years prior to FOFA legislation.
Well done.
Look out for massive mental illness based Life & TPD and Income Protection Insurance claims....not from the clients...from the persecuted and continually victimised advisers.
There is a very dark agenda at work.

Very interesting. How does an AFSL firm respond to this. The privacy laws would require you to destroy old client records. So which is more important keeping the records to address a potential claim, or destroying the records to comply with the the privacy laws (principal 11 which states that all personal information must be destroyed as soon as the purpose for collecting the information is complete.)

RobinBris - You see to misunderstand the law. There is no legislation or regulations requiring you to destroy old client records. The law only requires you to not disclose the records to third parties without the client's consents. Also, the "7-year rule" relates to the MINIMUM time period for retention of records, not the maximum period. You would be wise to retain records.

I beg to differ. Suggest you read the privacy laws very carefully. This is a good summary if you don't want to read everything. Principal 11 is the key area. The entity "must also destroy or de-identify personal information it no longer requires (unless otherwise required to retain it by law)".

RobinBris - This is why it is important to read SOURCE documents instead of summaries. This is a cut-and-paste extract of PRINCIPLE 11 of the APP in particular paragraph 11.3.

11.3 An APP entity must take reasonable steps to destroy or de-identify the personal information it holds once the personal information is no longer needed for any purpose for which the personal information may be used or disclosed under the APPs. This requirement does not apply where the personal information is contained in a Commonwealth record or where the entity is required by law or a court/tribunal order to retain the personal information (APP 11.2).

The destruction or de-identifying is only required where the information is no longer needed for the purpose for which it was intended to be used or disclosed. Information such as fact finder and risk profile information was collected to assist in producing advice, and also to demonstrate compliance with "best interests duty" - see sec 961B(2)).

If the operations of the Corporations Act 2001 mandated compulsory dispute resolution scheme (AFCA) now requires a adviser to elicit evidence of their advice process from 11 years ago it becomes completely legitimate and not a breach of the Principle to retain such information. If you think I am wrong just give ASIC or AFCA a call on this point - and even OAIC.

Again, it is important to rely on source documents and not summaries. Summaries, even good ones, may not be able provide full context to every circumstance that can arise.

Thanks Mark, I have wasted some more time on the issue and concluded you are absolutely correct. But this retrospective change is interesting AFCA are currently having problems with it as shown by case 526729. "The lack of primary records provided by the complainant or the financial firm from 2004 has limited the financial firm’s ability to conduct a full and fair review of the advice. " This case was released in May 2019 so it is relatively recent. I am interested in what people think of the implications of this.

Hi RobinBris. Thanks for your feedback, and your reference to the recent AFCA determination. Regrettably, it is not AFCA that is having problems (or will have problems) with the issue of record keeping and legacy complaints, but as usual the poor beleaguered AFS licensee. I note that while AFCA was good enough to comment on the problem for AFS licensees in Case 526729, AFCA saw absolutely no bar to making an award against the AFS licensee. I fear that in future this will also likely be the 'play book' going forward. Expression of concern while 'belting' the licensees with awards against the licensees.

I must say that I am surprised at what appears to have been the approach by the licensee in case 526729. The claim appears to have been outside the limitation period at the time it was raised with FOS (in 2017) yet the licensee did not seek to have the matter dismissed due to the expiry of the limitation period. There was no suggestion at that time in 2017 of the coming "retrospective" approach that would be adopted by AFCA in 2019 - so no reason for the licensee not to seek to have the matter thrown out.

Unfortunately, most licensees handle FOS (now AFCA) matters very poorly - and it costs them both in time and money.

As an aside, I am interested to see the depth into which you have delved on this matter. No, I do not think you have wasted time. This will likely be one of the key issues for the industry this financial year, and I think it is likely that claims of this nature may actually send some licensees into insolvency. I would be keen to keep in touch with you on these type of issues. If you are interested in keeping in touch you should feel free to contact me on my personal email: [email protected]

Best wishes


they only have themselves to blame !!

Who is to blame John Phillips ?
Please identify who exactly is to blame ?

Do gooders always have someone to blame!! They couldn’t complain if they didn’t, it’s their life blood!!

Add new comment