Courts dismiss two appeals against AFCA

Two courts have dismissed appeals that have questioned the Australian Financial Complaints Authority’s (AFCA’s) fairness in both its superannuation and general divisions, and its decision making approach.

On 9 April, 2020, the Federal Court dismissed an appeal by the QSuper Board that argued AFCA had exercised judicial power in the contravention of Chapter III of the Australian Constitution.

QSuper argued that AFCA had found the fund breached section 1017B of the Corporations Act which required QSuper to give notice of the nature and effect of a significant event.

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The court found AFCA did not exercise judicial power and were allowed to make decisions about legal rights such as compliance with the law or compliance with the trust deed.

The Supreme Court of Queensland on the same day dismissed an appeal by Investors Exchange Limited that argued that AFCA’s determination was no open to the facts and had misconstrued the evidence provided.

AFCA’s determination was found to be reasonable, open to the facts, and had correctly interpreted the documentation.

The court said the principles set out in case law involving External Dispute Resolution (EDR) scheme, the Financial Ombudsman Service, are equally applicable to AFCA. AFCA obtained an order for specific performance to ensure the determination is complied with.

Justice Peter Applegarth noted that AFCA’s primary duty was to do what was fair in all circumstances.

“It is possible that, having had regard to legal principles, the decision-maker decides to not apply them because the strict application of those legal principles would lead to an outcome which is unfair in all the circumstances,” he said.

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