Case 1:

In this case the Australian Financial Complaints Authority (AFCA) finds the trustee had not acted fairly and reasonably when deciding to refuse to refund fees charged to a member who had asked to transfer to another fund (fund 2). As is often the case, the subtlety of the dispute is found in a close analysis of the facts.

For over 30 years, the complainant was a member of fund 1 but he was unhappy, and in 2017, he phoned the trustee’s call centre to discuss his desire to have higher investment returns and lower fees. A consequence of this contact was his decision to become a member of fund 2 (which on the facts appears to have the same trustee as fund 1).

The member received two telephone calls from fund 2 staff. AFCA had an opportunity to listen to recordings of these conversations. In so doing, they were satisfied it was clear to the trustee’s representative the entire purpose of opening an account in fund 2 “was to have a vehicle more suitable to his needs into which his account in fund 1 could be transferred”. In the first call, the trustee’s representative explained that it was necessary to initially become a member of fund 2 and then the transfer could take place after this step had occurred. He was advised another person would call him regarding the setting up of the new account.

In the second call there was a discussion about what was needed to set up the account, but no conversation took place about the steps to facilitate the rollover from fund 1. The trustee representative was able to complete most of the application form for the new account based on the information provided by the member over the phone. Importantly, that involved pre-ticked instructions to the trustee authorising a SuperMatch search with the Australian Taxation Office but for the member to view the results and then decide whether or not to consolidate funds. The partially completed form was emailed to the member who added his tax file number details, signed and dated the form and returned it to the trustee.

The SuperMatch result found one match, namely fund 1, and the trustee emailed the member three times to attempt to obtain his instructions. AFCA was satisfied that email contact was in accordance with acceptable practice, but given the essence of the first contact with the trustee had been to rollover his fund 1 account to his fund 2 account, the trustee, acting fairly and reasonably, should have taken further steps to act on the member’s verbal instructions.

The member had requested a refund of $926.63 which was an amalgamation of three figures from his fund 2 member statement. AFCA pointed out that this was not his real loss suffered for the failure to rollover fund 1’s balance to fund 2. It was the fees charged in fund 1 from the date the fund 2 account was established that should not have been incurred. AFCA substituted its own decision for that of the trustee’s and effectively ordered the trustee to refund all the fees charged in the fund 1 account over the ‘relevant period’ together with interest at the fund 1 cash rate to the date of payment. The relevant period was the date the fund 2 account was established to the date the fund 1 account was closed, a little over one year.

It is worth noting AFCA did not order compensation to be paid to the member because, for a superannuation complaint, they can only consider remedies which put the member back in the position he would have been if the trustee’s unfair and unreasonable decision had not occurred. For this reason, AFCA was unable to direct the trustee to pay compensation.

Case Number: 602974

Case 2:

This case involves the trustee’s decision to not compensate the member for investment losses when he was unable to switch from high growth to cash for a short period of time. The question for AFCA was whether this decision was fair and reasonable in the circumstances.

The period of time was from 26 September to 23 October, and this was due to the trustee’s decision to change administrators. The suspension of member transactions was necessary while the data was migrated from the old to the new administration system and then tested for accuracy. The trustee’s ability to appoint a new administrator was, of course, permitted under the trust deed and on the evidence, it made this decision to improve member services.

In preparation for the data transfer, the trustee sent members email notice of the suspension in both August and September. The cut off dates for both paper and on-line transactions were clearly identified in these emails as was the information that the on-line accounts would be ‘read only’ access until 15 October. The trustee was able to provide AFCA with evidence the member had opened both emails before the cut off dates and, therefore, it could be assumed he had an opportunity to be informed about the forthcoming disruption.

The member argued he wished to transact on 25 September and should have been able to do so over the phone. The trustee pointed out that the entire point of the suspension period was to ‘freeze’ member data at a point in time.

AFCA was satisfied that the trustee’s decision to not compensate the member for the period up to 15 October was fair and reasonable. This was the date the trustee had informed members on-line access would be available, but the on-line access didn’t operate until 23 October and the members were not advised of the reason for the delay.

The member was anxious about not being able to check his account balance daily. The member called the trustee on 15 and 23 October. It was clear the member was concerned about possible investment losses in the first call and although the trustee, at this time, would have been able to process investment changes over the phone this was not discussed with the member. During the second call he was given login details over the phone and was able to check his balance. He also made a verbal complaint which was lodged by the call centre representative.

The trustee calculated that by the member’s investment remaining in the high growth category for the eight day period from 15 to 23 October he was $115.02 ahead than if the trustee had actioned his investment switch to cash on 15 October. It was, therefore, clear the member had suffered no financial loss and the trustee decision to not compensate him was fair and reasonable in the circumstances. Obviously, the result may have been different if the member had suffered an investment loss in the period 15 to 23 October.

Case Number: 601632