Rules governing the Australian Financial Complaints Authority’s (AFCA) jurisdiction to deal with disputes about authorised representatives (ARs) have been amended in the wake of a court case last November that went against it.

AFCA has previously told insuranceNEWS.com.au that it would review and consider the NSW Supreme Court’s verdict in the case that was lodged by DH Flinders, a specialist funds management advisory business.

The court ruled AFCA does not have the “authority, jurisdiction or power” to deal with two complaints filed against DH Flinders. It said the complaints of alleged false representations made by an AR of DH Flinders concerned a product that had nothing to do with the advisory business. The AR was terminated after DH Flinders discovered the representative had other businesses.

AFCA says the changes to the rules – which were directed by the Australian Securities and Investments Commission (ASIC) – will provide clarity for consumers and financial firms.

“[The] case related to AFCA’s jurisdiction to consider a complaint against a licensee in relation to the conduct of its corporate authorised representative, specifically where the conduct of the representative was without or outside authority,” AFCA said.

“The judgment highlighted that AFCA’s rules need to be clearer to ensure that they reflect the same obligations and liabilities for licensees as set out in the Corporations Act.

“At ASIC’s direction, the Rules now clearly reflect the same statutory liability for licensees regarding their authorised representatives as set out in the Corporations Act and the National Consumer Credit Protection Act.”

The Corporations Act states that licensees have obligations for the conduct of ARs, including that they are responsible for conduct outside the representative’s authority.

AFCA says the changes will apply to complaints lodged from January 13 onwards. Complaints received before this date will be handled according to the previous rules.

A very small number of complaints that may be impacted by the court judgment are currently under review. AFCA says it is in contact with those complainants and financial firms to discuss the specifics of their complaint.

“For the small number of complaints which may be outside AFCA’s rules, AFCA will be encouraging the financial firms involved to consent to AFCA considering the complaint to achieve an early resolution and avoid the prospect of potential court or other action by the complainant.”

Click here for the AFCA rules.