AFCA’s fairness approach

AFCA is developing its proposed Fairness Standard and will be issuing a consultation paper in February or March 2020. Background.

The Fairness Standard will include a set of criteria for fairness which can be plainly understood and will explain how AFCA assesses fairness in any given complaint.

AFCA says this approach will ensure it delivers clear, consistent and quality decision making and will set the bar for financial firms when applying fairness to their own internal dispute resolution processes.

It is expected that the draft standard will include a “fairness tool” which will include the following definitions for comment:

Fair dealing
Ensuring that one party does not take unfair advantage of another:
* in the nature of the bargain struck
* in the circumstances of entering that financial arrangement.

Fair treatment
* Ensuring that one party is not treated inequitably or in a way that is adverse to their interests

Fair service
Delivering quality, professional financial products and services in a manner that:
* is fit for purpose
* meets a consumer’s legitimate interests and reasonable expectations.

Fair remediation
A prompt and proportionate response when things go wrong.

Fairness principles
Financial services providers must “play by the rules” including:
* Keep promises made
* Be open and honest
* Do not take unfair advantage
* Be ethical and professional
* Reasonable care and skill
* Ensure services are fit for purpose
* Protect the money of others
* Provide value and benefit
* Serve the interests of others
* Consider consequences and impacts of your actions.

Fairness questions to be asked by AFCA
In deciding whether a financial services provider has acted fairly AFCA will ask fairness questions:
1. Did the parties obey the law?
2. Did the parties make promises or representations they did not meet?
3. Did the parties act honestly, reasonably and in good faith with their dealings with each other?
4. Did one party take unfair advantage of another? Were specific circumstances or vulnerabilities considered?
5. Did the financial firm provide the product or service ethically, with reasonable care and skill and in accordance with industry and professional practice?
6. Did the financial firm meet the consumer’s reasonable expectations about the product or service?
7. Did the product or service perform as expected and provide a fair value or benefit?
8. When acting for a consumer, did the financial firm act in the interests of the consumer or group of consumers as a whole?
9. How did the parties treat each other during their relationship or after concerns were raised?
10. What was the impact on the consumer and their experience of the service?

If you found this article helpful, then subscribe to our news emails to keep up to date and look at our video courses for in-depth training. Use the search box at the top right of this page or the categories list on the right hand side of this page to check for other articles on the same or related matters.

David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

Print Friendly, PDF & Email

Your Compliance Support Plan

We understand you need a cost-effective way to keep up to date with regulatory changes. Talk to us about our fixed price plans.