The Australian Financial Complaints Authority (AFCA) denies compensation for Union Standard International Group Pty Ltd (USG). Following a thorough review of complaints concerning USG, AFCA has determined that they do not meet the eligibility criteria for the new Compensation Scheme of Last Resort (CSLR).

With the CSLR unavailable to USG complainants and with no prospects of compensation forthcoming from USG, AFCA is regrettably not going to further entertain these complaints. This prompted its closure.

AFCA expressed empathy for the affected individuals. AFCA said, “We acknowledge USG complainants may be very disappointed by this outcome after waiting patiently for further developments. We have written to complainants explaining why we are unable to consider these cases.”

AFCA Denies Compensation: Disappointment for USG Victims

The legal framework established in June 2023 by the Australian Government stipulates that the CSLR can only entertain claims for compensation if certain conditions are available. This includes a favorable AFCA determination that the financial firm in question has failed to pay compensation. This is typically due to insolvency. Moreover, if the financial service or product involved falls within specific categories outlined in the law.

Under this legislation, the CSLR is going to address complaints related to providing personal financial advice to retail clients. This also includes dealing in securities for retail clients and engaging in credit activities. This was defined by the National Consumer Credit Protection Act 2009 (Cth).

Furthermore, amendments made on January 31, 2024, to the conditions of AFCA’s authorization by the Australian Government restrict AFCA from issuing a determination in complaints against financial firms that are unlikely to remunerate any awarded compensation and were not authorized due to licensing conditions, to provide the products or services covered by the CSLR.

USG failed to meet these licensing prerequisites, and with AFCA reasonably convinced of its inability to satisfy compensation obligations. This has consequently been excluded from consideration. Also, AFCA emphasized, “Our decision to exclude USG complaints has not been made lightly. The types of complaint AFCA can consider are set out in our Rules.” AFCA offers a 30-day window for complainants to object to the exclusion of their complaints. Any objections must be substantiated with evidence supporting why the exclusion should be overturned.

Union Standard International Group Pty Ltd’s expulsion from AFCA membership on November 11, 2021, and the cancellation of its financial services license by ASIC on September 14, 2020, further underscore the regulatory actions taken against the entity.

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