Court upholds appeal in case involving superannuation insurance complaint

The complainant lodged a complaint to AFCA in 2018 following an adverse decision made by MetLife concerning a TPD claim under an insurance policy issued by MetLife to the trustee of his super fund.

AFCA initially accepted an objection from MetLife that the AFCA Rules required the 2018 complaint to have been made within two years of the Complainant ceasing work and it was out of time.

However, in 2019 AFCA wrote to MetLife noting that page 126 of the AFCA Operational Guidelines states that “where a fund member does not meet the AFCA time limits for a superannuation complaint, AFCA ‘may be able to accept a complaint against the insurer under its general jurisdiction”.

AFCA made the decision to exercise this discretion to accept the complaint against MetLife in relation to the policy.

On 12 April 2019, AFCA purported to determine the 2018 complaint adversely to MetLife and stated that the adverse determination had been made under the AFCA Rules.

MetLife then commenced proceedings in the Federal Court seeking a declaration that AFCA’s determination was not binding on MetLife on the basis that AFCA lacked the authority to determine the complaint, as it was a “complaint relating to superannuation” within the meaning of s 1053 of the Corporations Act, but it did not satisfy any of sub-sections 1053(1)(a)-(j).

The insurance provider submitted that statutory context, legislative history and other extrinsic material 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 complaint set out in sub-section 1053(1)(a)-(j).

While there was no dispute between the parties that the 2018 complaint was a complaint of the kind listed in sub-ss 1053(1)(a)-(j), there was a dispute about whether the complaint was a complaint relating to superannuation for the purposes of s 1053(1).

Section 1053 of the Corporations Act defines a superannuation complaints as:

1. a) A complaint about an insurer’s decision under an insurance policy held by the trustee of a Regulated Superannuation Fund or an Approved Deposit Fund will:

(i) if all of the time limits in rule B.4.1.1 have been met, be considered as a Superannuation Complaint, by joining the insurer to a complaint against the trustee’s decision;

(ii) otherwise, be considered as a non-superannuation complaint against the insurer; and

1. b) a complaint about financial product advice relating to superannuation is not a Superannuation Complaint unless it is provided by:

(i) the trustee of a Regulated Superannuation Fund or Approved Deposit Fund, an RSA provider or a life company as issuer of an Annuity Policy (superannuation provider); or

(ii) an employee or representative of a superannuation provider under the superannuation provider’s licence, to a member of the Regulated Superannuation Fund, a beneficiary of the Approved Deposit Fund, a holder of the RSA or a person with an interest in the Annuity Policy.

Otherwise a complaint about financial product advice relating to superannuation will be considered as a non-superannuation complaint against the Financial Firm providing the advice.

AFCA relied in particular upon the terms of para (a)(ii) of the definition.

It submitted that paragraph (a)(ii) of the definition meant that where there was a complaint such as the one in this case, the complaint would be considered as a Superannuation Complaint only if it was in time, but otherwise it would be considered as a non-superannuation complaint.

This was said to be an operation of the AFCA Rules by way of contract. On that basis, it was claimed that the members of the AFCA Scheme had agreed that a complaint like the complaint in this case (being a complaint that could be advanced against a member of the scheme as a non-superannuation complaint) could be considered under the AFCA Scheme.

The primary judge in the Federal Court decision placed particular reliance on statements in the extrinsic material about the objective of creating a “one-stop shop” to address all complaints that could previously be made under the previous external dispute resolutions schemes.

“There is considerable support for the submission to the effect that the purpose of the provisions introduced into the Corporations Act by the AFCA Establishment Act was to continue the scope and structure of the previous regime in terms of the type of complaints that might be brought but bring them within a one-stop shop in the form of the AFCA Scheme,” his Honour stated.

He stated that the terms of the Ramsay Report and the second reading speech supported that conclusion.

In the Full Federal Court proceedings, MetLife submitted that the primary judge fell into error by relying on the Ramsay Report, the second reading speech in respect of the AFCA Establishment Bill and the Revised EM to support an inference that the legislature intended to preserve the scope and structure of the former regime in the AFCA Scheme so as to support his Honour’s ultimate construction of s 1053.

The insurance provider stated that when the Second Reading Speech and the Ramsay Report are considered in full, together with the Revised EM, no legislative intention can be discerned to create a ‘one-stop shop’ external dispute resolution scheme by the AFCA Act that otherwise preserved the types of determination that could previously be made by the SCT and FOS.

It submitted that the phrase “one-stop shop” was equally capable of being read as a short-hand reference to the replacement of multiple decision-making bodies with a single decision-making body.

It also stated that the Ramsay Report should be understood to recommend a new external dispute resolution scheme within which a binary world exists where a complaint relating to superannuation must be dealt with within a discrete superannuation jurisdiction or not at all, whereas non-superannuation complaints are dealt with in a separate general jurisdiction with different rules and procedures.

The Full Federal Court found that none of the matters raised by AFCA established that the complaint was not a “complaint relating to superannuation”, essentially for the reasons advanced by MetLife.

“In particular, we accept that, given that the parties to the policy were the trustee and MetLife, the complaint made by [the Complainant] was in substance a complaint that his superannuation trustee had not pursued MetLife in circumstances where he had a reasonably arguable claim for TPD under the policy,” stated Justices Middleton, Jackson and Halley.

“The Complainant had no right to receive any entitlements under the policy itself. The trustee of complainant’s superannuation fund was the policyholder and the party with the right to the entitlements under the policy.”