The Federal Court applied a “very narrow view of judicial power” when it rejected a superannuation fund’s appeal against a ruling made by the Australian Financial Complaints Authority (AFCA), according to law firm Allens.

The court did not agree with Brisbane-based QSuper’s submission that AFCA exercised an “impermissible exercise of judicial power” when it determined a complainant should be refunded for overpaid life policy premiums.

Partner Michelle Levy, who specialises in financial services law, thinks the court’s findings “will embolden” AFCA.

“I would say the Federal Court has applied a very narrow view of judicial power and a narrow view of the powers given to AFCA under the Corporations Act,” Ms Levy told insuranceNEWS.com.au today.

“They have not looked at the substance of what AFCA does, what it actually means for trustees and other financial firms and how AFCA operates in practice.

“I don’t think that the decision is a surprise,” Ms Levy said. “I think it follows a trend which is to increasingly narrow the scope of what would ordinarily be thought of as judicial power, so you then get a shift from courts and law and precedent to decision-makers who have in substance all of the same powers of a court but are not constrained by the same principles that apply to a court.”

She says that when AFCA looks into a dispute, its decision-makers “aren’t bound by precedent and the rules of evidence don't apply”.

“They can’t make an unlawful decision but they can overturn a decision that was lawful,” she told insuranceNEWS.com.au.

A spokesman for QSuper says the fund is considering the Federal Court’s judgement and the appropriate next steps. It says the claimant who lodged the complaint with AFCA has been refunded the overpaid premium as determined by the dispute-handling body.

“One of the main points of concern for QSuper in this action was to clarify the position in relation to QSuper’s compliance with disclosure obligations,” the spokesman says in a statement to insuranceNEWS.com.au.

“QSuper welcomes the confirmation in the decision that AFCA and the Federal Court did not find that QSuper failed to satisfy its statutory disclosure obligations. QSuper is further analysing the other aspects of the decision.”