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Brokers seeking to appeal their AFCA pre-expulsion notices will need to do so by Wednesday afternoon (10 November) or face potential expulsion, breaching licensing requirements.
Last week, many brokers reported receiving pre-expulsion notice emails from the chief ombudsman and chief executive of the Australian Financial Complaints Authority (AFCA), David Locke, warning them that they may be expelled from the body due to “unpaid invoices”.
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AFCA’s board of directors will meet on Thursday (11 November) to consider expelling these members from AFCA.
The email caused alarm among affected brokers – particularly from those who had already paid their fees and received renewed AFCA membership certificates – given that AFCA expulsion would result in them breaching their licence requirements.
Under licence conditions, Australian credit licensees and authorised credit representatives are required to be a member of AFCA and have in place appropriate internal dispute resolution procedures (as per ASIC Regulatory Guide RG 165).
AFCA has advised that anyone wishing to provide written evidence or explanation to the company secretary as to why they should not be expelled have until close of business on Wednesday (10 November), to do so.
The company secretary can be reached by email at
Brokers who have not yet paid their outstanding invoices are also advised to “urgently contact” AFCA’s accounts team on
Payment will result in the withdrawal of the motion to expel, the complaints body confirmed.
MFAA expresses concern with short rectification period
Since the notices were issued last week, several aggregator and association group heads have been busy engaging the complaints authority to seek clarity on the matter.
The CEO of outsource Financial, Tanya Sale, told The Adviser last week that the aggregation group had been actively engaging with AFCA to rectify the situation.
Similarly, the Mortgage and Finance Association of Australia (MFAA) said it had been engaging with AFCA on the issue since the issuance of the notices to brokers.
Speaking to The Adviser, the CEO of the MFAA, Mike Felton, said he had reached out to AFCA to “express concern regarding what is evidently a very short notice period to remedy these pre-expulsion notices, and, secondly regarding reports that some brokers have already paid the amounts in question”.
Mr Felton continued: “AFCA have advised that the pre-expulsion notice is the fourth and final notice in the process (with the invoice, 30-day notice and 60-day notice being the others) and – in accordance with the AFCA constitution – has to be sent out prior to the AFCA board meeting.
“They have also advised some broker payments may not have been allocated to their accounts potentially due to reference numbers not having been included when the payments were made.
“Given the severe consequences of expulsion, I suggested to AFCA that providing approximately one week to remedy these final pre-expulsion notices is an insufficient period and consideration should be given to extending that.
“Whilst AFCA will not be providing an extension in this instance, I have been informed that they will be reviewing their correspondence and process in due course and will consider our recommendation as part of that review.”
The MFAA CEO added that he had also raised concerns regarding brokers that may be in hardship.
“[I] have been advised that AFCA will consider such circumstances and would be pleased to work with the member to agree [on] an appropriate arrangement if required,” the MFAA CEO said.
“Clearly, receiving a notice of this nature will have caused a great deal of distress for those concerned and particularly given the potential consequences of being expelled as a member of AFCA.
“Where brokers have received such notices, we recommend that they contact AFCA immediately – and certainly prior to 11 November – to ensure that AFCA has appropriate contact details on file or to provide evidence of payment.
“If the broker is disputing the account or experiencing hardship for any reason, then this should be brought to AFCA’s attention immediately so that it can be addressed or an arrangement can be entered into.”
Mr Felton told The Adviser that the MFAA would continue to have “further conversations with AFCA on this matter as well as in relation to the shortcomings of the current AFCA fee structures in general”.
Meanwhile, the managing director of the Finance Brokers Association of Australia (FBAA), Peter White, said that while AFCA needed to “ensure they fix whatever the problem was (if there was one)” to prevent any future instances of this occurring, he added that brokers must also ensure they are providing “the correct details for reconciliation and data matching for the payment”, as well as ensure they are making their payments on time.
“It’s been a tough year for everyone so a heavy-handed approach to this isn’t the approach to be taken, rather one of working together to work through the challenge and resolve it in a collaborative way,” Mr White said.
“So, let’s work together and move forward.”
He urged any FBAA members to reach out to him directly should they be “having challenges they feel are not being resolved” regarding the pre-expulsion notices.
[Related: AFCA pre-expulsion letters cause alarm]
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