MetLife has appealed successfully against a court ruling that stated the Australian Financial Complaints Authority (AFCA) has authority to determine a complaint relating to superannuation that falls outside of section 1053 of the Corporations Act.

The Full Federal Court last week overturned the earlier ruling, which arose from legal proceedings MetLife took in 2019 to seek a declaration that AFCA’s determination on a superannuation dispute was not binding on the insurer.

The dispute was triggered after AFCA determined the complaint, relating to a total and permanent disability (TPD) claim under a policy issued by MetLife to the trustee of the complainant’s super fund, fell within its “general jurisdiction”.

AFCA says the complaint does not meet the timeframe for a superannuation dispute but told the insurer it “may be able to accept a complaint against the insurer under our general jurisdiction”, referencing the ombudsman’s operational guidelines.

The Full Federal Court in its ruling notes “much reliance was placed by AFCA on the references… to the creation of a ‘one-stop shop’ for the determination of financial complaints to resolve ‘all financial complaints’.”

AFCA commenced in November 2018, replacing its various predecessors as a “one-stop shop” to oversee financial disputes.

“We do not accept that these references support any contention that it was intended by the legislature that all methods and alternatives for the resolution of complaints provided by the previous external dispute resolution bodies must be retained,” the Full Federal court ruling says.

MetLife in its appeal contended that the earlier ruling, made in the Federal Court, was an “error”.

The life insurer says section 1053 of the Corporations Act supports the conclusion “that AFCA has no authority to determine a complaint relating to superannuation” that does not fall within any of the categories of the complaint set out in any of the section’s sub-classes.

AFCA had however submitted the primary judge was correct to determine that section 1053 did not preclude it from determining the 2018 complaint.

The ombudsman also contends in its amended notice of contention that the 2018 complaint was not a “complaint relating to superannuation”.

But the Full Federal Court says it is “satisfied” that AFCA does not have authority to determine a complaint that falls outside of the ambit of section 1053.

It rules “that none of the contentions advanced in the amended notice of contention [by AFCA] relevantly detract from that conclusion”.

“It follows that the appeal should be allowed and the amended notice of contention should be dismissed,” the ruling says.

Herbert Smith Freehills, the solicitor for MetLife, says the ruling means complainants will no longer be able to elect between making a complaint against the superannuation trustee on the one hand and the life insurer on the other, if the true nature of the complaint is one relating to superannuation.

“In other words, where the complainant wishes to complain against a decision of the issuer of life insurance benefits under the superannuation fund of which they are a member, this complaint will not be able to be brought directly against the insurer but rather, the insurer would have to be joined pursuant to a complaint made against the trustee,” it says.

“This result removes the prior ability of a complainant to go directly against the life insurer where a complaint is otherwise time barred under the AFCA Rules.”

Click here for the court ruling.