AFCA closes complaints against Union Standard International Group
The Australian Financial Complaints Authority (AFCA) has dashed the hopes for compensation of the victims of Union Standard International Group Pty Ltd (USG).
AFCA reviewed complaints about USG and assessed they do not meet the eligibility requirements for the new Compensation Scheme of Last Resort (CSLR).
With the CSLR not available to USG complainants, and no prospect of compensation being paid by USG, AFCA is not authorised to continue considering these complaints, and these complaints will be closed.
The body commented:
“We acknowledge USG complainants may be very disappointed by this outcome, after waiting patiently for further developments. We have written to complainants explaining why we are unable to consider these cases”.
In June 2023, the Australian Government passed a law which says the new CSLR will be able to consider a claim for compensation if the consumer has received a favourable AFCA determination that the financial firm has not paid (for example, because it has gone into liquidation), and the financial service or product involved is one of those defined in the law.
Under the law, the CSLR is limited to complaints about:
- providing financial product advice that is personal advice to retail clients
- dealing in securities for retail clients
- engaging in a credit activity within the meaning of the National Consumer Credit Protection Act 2009 (Cth).
In addition, on 31 January 2024, the Australian Government amended the conditions of the authorisation for AFCA to be Australia’s financial sector external dispute resolution scheme. This change means AFCA cannot issue a decision (also known as a determination) in a complaint against a financial firm for certain financial services and credit activities if that firm:
- would be unlikely to pay any compensation awarded; and
- was not authorised (because of its licensing conditions) to provide the products or services within scope of the CSLR.
USG does not meet these licensing conditions, and AFCA is satisfied it would be unlikely to pay any compensation awarded.
AFCA added:
“Our decision to exclude USG complaints has not been made lightly. The types of complaint AFCA can consider are set out in our Rules”.
As outlined in the letter sent to all USG complainants, AFCA provides a 30-day period during which complainants may object to a decision to exclude a complaint. Any objection must be supported by evidence as to why the exclusion should not apply.
On 11 November 2021, Union Standard International Group Pty Ltd was expelled from AFCA membership.
ASIC advised in its statement in September 2020 that it has cancelled USG’s financial services licence on 14 September 2020 under section 915B of the Corporations Act 2001 (Cth) (Corporations Act).