The Australian Financial Complaints Authority has released new guidelines on how it will approach disputes around misrepresentation and disclosure.

In October 2021 the duty of disclosure was replaced by a duty to take reasonable care not to make a misrepresentation.

However, the change applied to consumer insurance contracts only, and the old duty of disclosure and duty not to make a misrepresentation continued for other types of cover.

Following consultation, AFCA has released an “approach” document in relation to the new duty, and updated its previously published document on the old duties.

“By participating in consultations, stakeholders help create more predictable and efficient complaint resolution processes, ultimately reducing consumer harm and benefiting all parties who rely upon AFCA’s expertise and service,” the dispute authority said.

In the new approach document, AFCA addresses the importance of “genuinely held beliefs”.

“If a complainant represented something they genuinely believed was the truth, then it is unlikely that AFCA will find they have breached the duty,” it says.

“However, if the complainant misrepresented something they did not ‘know’ (i.e. they guessed or suspected the answer), then it is possible they may have breached the duty depending on all the other circumstances.”

See ANALYSIS.