AFCA jurisdiction remains unresolved
by Stanley Drummond*
The Federal Court has confirmed that the Australian Financial Complaints Authority (AFCA) has jurisdiction to determine “a complaint relating to superannuation”, even though the complaint is not of a kind listed in s1053(1) of the Corporations Act 2001 (Cth).
S1053(1) provides that a person can make a complaint about superannuation under the AFCA scheme only if the complaint is listed in that section. The kinds of complaints listed there include:
- a complaint “that the trustee of a regulated superannuation fund … has made a decision [about] … a particular member that is or was unfair or unreasonable”, and
- a complaint “that a decision by a death benefit decisionmaker [about] the payment of a death benefit is or was unfair or unreasonable”.
In practice, most complaints to AFCA about superannuation fall within one of those two categories.
FOS and the SCT
The AFCA scheme started on 1 November 2018 as the successor dispute resolution scheme to the Financial Ombudsman Service (FOS), the Superannuation Complaints Tribunal (SCT) and the Credit and Investments Ombudsman Service (CIO). AFCA is a “one-stop shop”.
FOS and SCT had operated quite differently. FOS was not a statutory body. Its determinations were contractually binding on FOS members (such as life insurers). SCT was a statutory body established by, and with powers conferred by, the Superannuation (Resolution of Complaints) Act 1993 (Cth), and SCT determinations were binding on superannuation trustees and life insurers by force of legislation.
A complaint by a superannuation fund member against the fund’s insurer – for example, a complaint about non-payment by the insurer of a TPD benefit – could be dealt with by SCT or FOS. The member could complain against the trustee to SCT, and the SCT would join the insurer to the complaint. Or the member could complain against the insurer (but not the trustee) to FOS.
Establishment of the AFCA scheme
The AFCA scheme’s establishment was facilitated by the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Act 2018 (Cth) (AFCA Establishment Act), which inserted a new Pt 7.10A into the Corporations Act.
To maintain consistency with how SCT had dealt with complaints, several sections of the Superannuation (Resolution of Complaints) Act were copied across (with modifications) to Div 3 “Additional provisions relating to superannuation complaints” of Pt 7.10A of the Corporations Act.
That approach involved introducing the new concept of a superannuation complaint, which required definition, to distinguish that kind of complaint from other complaints that do not attract the additional provisions in Div 3.
“Superannuation complaint” is defined in s1053(3):
(3) A complaint made in accordance with subsection (1) … is a superannuation complaint.
Subsection 1053(1) reads in part:
When complaints relating to superannuation can be made under the AFCA scheme
(1) A person may, subject to s1056, make a complaint relating to superannuation under the AFCA scheme only if the complaint is a complaint:
(a) that the trustee of a regulated superannuation fund or an approved deposit fund has made a decision (whether before or after the [start] of this section) relating to:
(i) a particular member or a particular former member of a regulated superannuation fund; or
(ii) a particular beneficiary or a particular former beneficiary of an approved deposit fund;
that is or was unfair or unreasonable; or
(j) that a decision by a death benefit decisionmaker relating to the payment of a death benefit is or was unfair or unreasonable.
S1056 provides further limitations on when a superannuation complaint may be made to AFCA about a decision about payment of a death benefit.
On a literal reading, s1053(1) seems to limit the kinds of superannuation complaints that can be made under the AFCA scheme to complaints of the kinds listed in s1053(1). However, that is not what the court held in MetLife v AFCA.
In 2014, a superannuation fund member claimed TPD benefits under two group life policies held by the fund’s trustee. The insurer denied the claims.
In 2017, the member complained against the insurer to FOS. The claim under one policy exceeded FOS’s monetary limit, so FOS did not consider it. In 2018, FOS recommended the claim under the other policy be determined in the insurer’s favour. The member did not accept the recommendation. The parties were invited to provide further information by 10 November 2018.
The AFCA scheme started on 1 November 2018. The member’s complaint about the second policy (the 2017 complaint) was transferred from FOS to AFCA.
In November 2018, the member complained against the insurer to AFCA about the claim under the first policy (the 2018 complaint), on the basis the monetary limit that had applied to FOS did not apply under the AFCA scheme. The insurer objected to the complaint on the basis that, under the AFCA rules, it was a superannuation complaint and could only be brought within two years of the member permanently ceasing work, and it had been brought out of time.
AFCA considered it could treat the 2018 complaint as a non-superannuation complaint against the insurer which had not been brought out of time.
On 12 April 2019, AFCA determined both complaints adversely to the insurer. AFCA applied the FOS terms of reference to the 2017 complaint and the AFCA rules to the 2018 complaint.
In 2019 the insurer started Federal Court proceedings against AFCA seeking declaratory relief that its determinations for each of the 2017 and 2018 complaints were not binding.
For the 2017 complaint, the insurer asserted AFCA had no power to determine that complaint because that power had been conferred on FOS. The insurer later withdrew that part of its application.
For the 2018 complaint, the insurer asserted the complaint was “a complaint relating to superannuation” within the meaning of s1053(1) but was not a complaint of a kind listed in s1053(1). Therefore, AFCA had no jurisdiction to determine the 2018 complaint. In the alternative, the insurer asserted the requirement for the complaint to be brought within two years applied, and it was brought outside the time limit, which was “non-extendable”.
AFCA brought a cross-claim against the insurer seeking an order for specific performance requiring payment of $309,000 to the trustee (the amount determined by AFCA as the TPD benefit under the second policy) and to calculate and pay to the trustee the TPD benefit under the first policy and interest.
The court’s decision
The court preferred AFCA’s construction of s1053(1).
AFCA submitted that the section specifies the kinds of complaints which attract the “additional provisions” specified in the new Div 3 of Pt 7.10A of the Corporations Act, and that s1053(1) is not concerned with curtailing the kinds of complaints that can be made to AFCA.
The court noted that on AFCA’s case, the words “a complaint relating to superannuation” meant “a complaint which related to superannuation in the sense that it invoked the statutory authority conferred in respect of superannuation complaints by the provisions introduced into the Corporations Act by the AFCA Establishment Act”.
AFCA also submitted that the purpose of the new provisions introduced into the Corporations Act was to continue the scope and structure of the previous regimes (FOS, SCT and CIO) in terms of the type of complaints that might be brought, but to bring them within the one-stop shop AFCA scheme. The terms of s1053 had to be construed in that context.
The court declared AFCA had jurisdiction or authority to make its determination about both the 2017 and the 2018 complaints.
The insurer’s application was dismissed and AFCA’s cross claim allowed.
The decision confirms AFCA’s jurisdiction to determine a complaint by a superannuation fund member against the fund’s group life insurer for non-payment of an insured benefit. A complaint of this kind could formerly be made to FOS.
What remains unclear is whether AFCA has jurisdiction to determine a complaint by a fund member against the fund’s trustee that is not a complaint that a decision of the trustee (or failure to make a decision) was unfair or unreasonable – in other words, a complaint about the trustee’s conduct not involving any decision (or failure to make a decision) of the trustee.
Such a complaint is certainly one “relating to superannuation” but is not a complaint that either SCT or FOS had jurisdiction to determine.
The limits of AFCA’s jurisdiction do not yet seem clear.
Metlife Insurance Ltd v Australian Financial Complaints Authority  FCA 23
* Stanley Drummond is a partner at Thomson Geer. This is an edited version of his original article.