AFCA Opens Consultation on Rule Changes to Expand Scam Complaint Jurisdiction Over Receiving Banks

The Australian Financial Complaints Authority (AFCA) has opened a public consultation on proposed amendments to its rules, aiming to broaden its jurisdiction to include the conduct of receiving banks in scam complaints. The consultation period runs from May 19 to June 13.

The proposed changes empower AFCA to investigate financial institutions that receive funds from scam victims, including the use of mule accounts and other banking practices in scam complaints. Deputy Chief Ombudsman Dr. June Smith states, “This amendment is a significant step forward in ensuring that all parties involved in the movement of scam funds are subject to appropriate scrutiny. It promotes fairness, transparency, and accountability of all banking participants in the transaction chain.”

AFCA's proposed rule changes focus on five main areas:

• Consideration of a receiving bank in a scam transaction. 
• Introducing the ability for AFCA to name financial firms that do not comply with Determinations. 
• Requiring the use of appropriate communication channels by paid representatives: This change will ensure paid representatives use the communication channel required by AFCA, including its consumer portal, when submitting complaints and communicating with AFCA about complaints. 
• Dealing with paid representatives who are not AFCA members: This proposed change would extend an existing Rule, giving AFCA further discretion to cease dealing with a complaint where a paid representative is required to be an AFCA member but is not. This will provide important protection for complainants who have engaged a paid representative but are unhappy with the service they provided and wish to make a complaint. 
• Removal of AFCA’s legacy Rules section: AFCA’s legacy jurisdiction has already closed at the end of June 2020, which is proposed to be removed from AFCA’s Rules. Any open legacy complaints will not be impacted.