Paid representatives are firmly on AFCA’s radar

  • By Zilla Efrat

The Australian Financial Complaints Authority (AFCA) is taking steps to protect consumers against paid representatives who are not acting in good faith, Chief Ombudsman and AFCA CEO David Locke said yesterday.

Speaking at a virtual AFCA Member Forum, he said: “Paid representatives are specialised businesses that offer to represent complainants for a fee. Our processes are designed so people can bring a complaint to AFCA without the need for assistance. This isn't meant to be a court or tribunal.

“We understand that in some circumstances people may want to have assistance or support, whether from family, friends, a financial counsellor or perhaps a paid representative. AFCA respects that.

“However, these fee-charging representatives are frequent users of our service for certain types of complaints, so we expect a higher standard of them.”

Locke said AFCA believed that paid representatives should act in good faith and aim to reach a fair resolution for their clients as quickly as possible.

“However, a small number of paid representatives have lodged complaints lacking merit or using delaying behaviours to drag out the process,” he said. not acting in good faith

“This is not in the best interests of clients, who may be paying fees – sometimes substantial amounts – for the agent to handle a complaint that has little chance of succeeding. It’s not fair to the financial firm, which is acting in good faith. It takes up time and resources that could be better deployed by AFCA in addressing other complaints for consumers, small businesses and financial firms.”

Locke said AFCA wanted to ensure the small number of paid representatives who are not acting in good faith were prevented from exploiting AFCA’s process via delaying behaviours or by lodging complaints lacking merit.

“AFCA does have the discretion to refuse to continue considering a complaint because of a representative’s conduct,” he said.

“AFCA used this power on more than 200 occasions in 2020/21. That was for inappropriate behaviour, not acting in best interests of the complainant by failing to engage in our process, and/or for not meeting the standards we expect of fee paid representatives.”

Locke said these 200 occasions involved about 20 paid representatives. Plus, most cases involved just a few firms.

He noted that AFCA had also been working closely with the Australian Securities and Investments Commission, Treasury, AFCA members and consumer advocates to address issues associated with paid representatives.

AFCA has also made changes to help it detect and deter poor behaviour. For example, it has run a pilot scheme testing a new approach to identifying complaints without merit at an early stage in its process and would introduce changes stemming from this a permanent feature of its systems soon.