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Brokers have raised concerns after receiving notices from AFCA suggesting they could be expelled due to unpaid fees, despite the fees in question having sometimes been paid.
Many brokers have this week received letters/emails from David Locke, the chief ombudsman and chief executive of the Australian Financial Complaints Authority (AFCA), warning them that they may be expelled due to unpaid outstanding invoices.
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The email, seen by The Adviser, states that “AFCA has made repeated attempts to contact [the member]" regarding “outstanding invoices which remain unpaid”.
As such, it details that the board of directors would consider expelling the member from AFCA at their meeting next Thursday (11 November).
Expulsion from AFCA would breach licence requirements (given that Australian credit licensees and authorised credit representatives are required to be a member of AFCA and have in place appropriate internal dispute resolution procedures under their licence conditions, in accordance with ASIC Regulatory Guide RG 165).
Copies of the notice have also been forwarded to the Australian Securities and Investments Commission (ASIC), according to Mr Locke’s email.
Brokers who have received the pre-expulsion notice have until close of business on 10 November to provide written evidence or explanation as to why they should not be expelled ahead of the board meeting.
Notices sent despite renewal certificates issued
However, several brokers have voiced alarm at the notices, with some telling The Adviser that they believe they had been sent them in error, as they had already paid the invoices in question and had received renewed certificates.
According to one broker – who wished to remain anonymous – while they had paid their fees in July and received a renewed certification, they were issued a pre-expulsion notice this week and were advised that the payments had not reconciled in AFCA’s accounts.
Another outlined that they had also paid their fees and suggested that they had not been contacted by AFCA before receiving this notice.
Speaking of the extent of the issue, the CEO of aggregation group outsource Financial, Tanya Sale, emphasised that this threatened the ability of brokers to run their businesses.
"This is their business and livelihoods we’re talking about," Ms Sale told The Adviser. "It becomes an issue for the broker when they wake up one morning and receive an expulsion notice from AFCA – when in fact they have renewed, paid and received their certificates when it was due – back in July."
What AFCA says
When contacted by The Adviser, a spokesperson for AFCA said that the body generally issues pre-expulsion notices to members that have outstanding monies owed to AFCA, “in accordance with AFCA’s constitution”.
“The grounds for this motion are that the member has failed to pay monies owing to AFCA within 30 days of receiving a notice requiring payment,” they added.
However, the spokesperson suggested that some members had “provided incorrect or incomplete reference details at the point of payment”, which meant that AFCA had been unable to allocate the payment to the broker’s membership invoice.
“In most cases, AFCA has attempted to contact these members multiple times previously in order to obtain the details required to allocate their payment correctly but has received no reply,” the spokesperson said.
“Therefore, AFCA has issued pre-expulsion notices to those that have been unable to provide correct or complete reference details by the due date.”
Steps to rectification
AFCA has advised any brokers who have already made a payment but received a pre-expulsion email to contact AFCA “as soon as possible to ensure their payment is reconciled”.
Those wishing to provide a submission of evidence to the company secretary to appeal the expulsion decision must do so by close of business on 10 November 2021. The company secretary can be reached by email at companysecretary@afca.org.au
Brokers who have not yet paid their outstanding invoices are advised to also “urgently contact” AFCA’s accounts team on
However, the spokesperson added that the “most efficient way” for members to contact AFCA about reconciling a payment was via email, as those who choose to call AFCA “may experience delays as AFCA handles a large number of daily calls from consumers and financial firms”.
Payment will result in the withdrawal of the motion to expel, the complaints body confirmed.
More assurances needed: outsource Financial CEO
However, Ms Sale said that more needed to be done to ensure this did not happen again.
The outsource Financial CEO said: "As an aggregator, we get involved to direct them to AFCA to rectify, but it needs to go beyond this.
"We, as an industry, need to know what has happened here and how, going forward, we’re able to ensure this does not repeat.
"Aggregators have very strong compliance processes in place to ensure mortgage brokers are meeting all regulatory components. So, when we see a discrepancy like this, we have a duty of care to our brokers to ask AFCA: 'How did that happen?' and 'How can we prevent it going forward?'"
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