Insurance in superannuation: AFCA complaints directly against life insurers – A thing of the past?

The Decision

Yesterday's decision of the Full Federal Court in MetLife Insurance Limited v Australian Financial Complaints Authority Limited [2022] FCAFC 173 upheld MetLife’s contention that AFCA does not have jurisdiction to hear complaints made directly against life companies relating to life insurance in superannuation.

The issue arose due to a specific complaint which was time barred under the AFCA Rules as a superannuation complaint, but in respect of which AFCA stated (to MetLife) that it “may be able to accept a complaint against the insurer under [its] general jurisdiction”.

Under the AFCA Rules, AFCA has jurisdiction to deal with complaints other than a superannuation complaint if the complaints “arise from or relate to…a legal or beneficial interest of the complainant arising out of…a financial investment (such as life insurance, a security or an interest in a managed investment scheme or a superannuation fund)…” (Rule B.2.1(e)(i)).

The key findings in the judgment are as follows:

• if a complaint relates to superannuation, it can only be brought in the AFCA jurisdiction if it falls within one of the categories of complaint set out in sections 1053(1)(a)-(j) of the Corporations Act. This means, in effect, that if a complaint relates to superannuation, it cannot be brought as a different category of complaint; for example, as one directly against an insurer; and
• this above position flows from the words “only if” (viz “a person may, subject to section 1056, make a complaint relating to superannuation under the AFCA scheme only if the complaint is a complaint”).

The principal argument from AFCA was that the relevant words in section 1053 of the Corporations Act do not limit what constitutes a superannuation complaint, but rather mean that a complaint can only be made as a complaint relating to superannuation (and not as any other type of complaint) if the complaint is within the sub-paragraphs of section 1053(1)).

Relevant extrinsic materials were also found to reinforce the key findings in the judgment in favour of MetLife. In particular, some of these materials indicated that:

• superannuation complaints required different procedures to non-superannuation complaints; and
• it was of concern that the same complaints could be made in two different ways, which could produce inconsistent outcomes.

It followed that “the contractual provisions in the AFCA Rules cannot consensually be expanded beyond statutorily defined limits” (at [178]), and “to the extent that the AFCA Rules purport to operate inconsistently with the statutory framework for the establishment and operation of the AFCA Scheme in the Corporations Act, they have no effect” (at [179]).

The Implications

It follows from the case that complainants will no longer be able to elect between making a complaint against the superannuation trustee on the one hand and the life insurer on the other, if the true nature of the complaint is one relating to superannuation.

In other words, where the complainant wishes to complain against a decision of the issuer of life insurance benefits under the superannuation fund of which they are a member, this complaint will not be able to be brought directly against the insurer but rather, the insurer would have to be joined pursuant to a complaint made against the trustee.

This result removes the prior ability of a complainant to go directly against the life insurer where a complaint is otherwise time barred under the AFCA Rules.

AFCA has a right to seek special leave to appeal the decision to the High Court.

Our team is happy to give you more information or a presentation in relation to the impacts of this landmark decision.