From 1 July small businesses have one year to file legacy complaints to AFCA

ASIC announced earlier this week, it has authorised the Australian Financial Complaints Authority (AFCA) to investigate complaints from consumers and small businesses dating back to 1 January 2008.

Under the government’s additional condition, introduced in February, AFCA will be able to deal with certain complaints about conduct by current member financial firms, which AFCA, its predecessor schemes, courts, or tribunals have not previously dealt with.

The Australian Small Business and Family Enterprise Ombudsman, Kate Carnell, has encouraged eligible small businesses impacted by financial misconduct as far back as 1 January 2008 to lodge their complaints. Small businesses could be awarded up to $1 million in compensation if their claim is successful, and the maximum compensation for primary producers is $2 million.

“This is a positive step forward for small businesses who have fallen victim to financial misconduct, as AFCA previously only took complaints going back six years,” Ms Carnell said.

“It’s a very simple process that involves clicking the yellow 'Make a complaint' button on the AFCA website.”

In order to apply, small businesses must have less than 100 employees; the complaints must relate to loans under $5 million; the submission must be about a financial entity that was a member of AFCA at the time of the complaint; and the small business must not have already had their case heard by the Financial Ombudsman or a court.

“It is unfortunate that AFCA is bound by the $5 million limit as we know of a range of cases where the small business loan was over this amount and those businesses have nowhere to go – no access to justice,” Ms Carnell said.

“These businesses don’t have the resources to take financial misconduct to court and they deserve justice too.”

AFCA will refer the complaint back to the financial firm to resolve and if the financial firm is unable to satisfactorily resolve a legacy complaint, AFCA will begin investigating from 1 October 2019.

Before small businesses submit their complaint, they are encouraged to identify the financial firm to which they have the complaint and identify the main issues as part of the complaint. They must also identify the losses incurred and what outcome is sought.