‘Flawed’ AFCA changes leaving large firms at risk
Changes made to the Australian Financial Complaints Authority (AFCA) following the Hayne Royal Commission are ‘flawed’, according to legal firm Creevey Russell Lawyers, as they leave larger businesses at risk.
The Royal Commission has extended the six-year limitation period for AFCA to commence litigation to 1 January, 2008 from 1 July, 2019.
But principal Dan Creevey said this extension was limited to credit facilities not exceeding $5 million so those businesses and farmers with facilities greater than $5 million would be worse off under the new rules as they would be unable to seek compensation.
He said he felt it was ‘inconsistent and inequitable’ by AFCA not to provide the same extension to these larger firms.
“Aggrieved businesses and farmers with facilities over $5 million are likely to have suffered greater losses. They may well now be in a worse financial position than parties with credit facilities under $5 million who are able to seek compensation through AFCA.”
“Additionally, these parties would need to fund their own actions so that there would be no cost to Government. We think this matter needs to be raised with politicians by aggrieved farmers and on their behalf by bodies such as the National Farmers Federation to ensure this unfair and unjust gap is closed.”
Creevey said he had already raised his concerns with the Department of Treasury and National Farmers Federation.
Recommended for you
As the first quarter of 2024 comes to a close, Money Management looks back on the corporate regulator’s bans and AFSL cancellations in the financial advice sector.
Insignia Financial is holding ‘relatively steady’ onto its rank as Australia’s second-largest financial advice licensee after the Godfrey Pembroke exit but Count is hot on its heels.
Liberal senator Slade Brockman has said the government needs to have a “cold hard look” at the level of regulation in the financial advice space and the costs of running a business.
FAAA chief executive, Sarah Abood, has warned changes in the first tranche of the QAR legislation around advice fees documentation could create more work for advisers rather than less.