The Australian Financial Complaints Authority (AFCA) is considered a one stop shop for all
disputes under the ever-encompassing heading of financial services. They consider complaints
- Credit, finance loans
- Banking deposits and payments
- Investments and financial
All companies that offer a financial
services or credit product are required
to have an external dispute resolution
scheme; and the go to recommended
authority is AFCA.
AFCA’s website states that they are an
impartial and independent company,
who’s role is to assist consumers and
small businesses to reach agreements
with financial firms on how to resolve
Each financial firm is required to pay a “membership” fee each year. This fee provides the
financial firm with the right to show they are a member of AFCA’s dispute resolution scheme
and not much else. Although not a government department, agency or regulator their decisions
are still considered binding on the financial firm. AFCA has the right to award the complainant
with a compensation award and the financial firm must comply with this decision.
It is our opinion from AFCA’s website that even though they are ‘impartial and independent’
they are still geared more towards the consumer, as they state:
“We assist consumers and small business to reach agreements with financial firms
about how to resolve their complaint.”
AFCA does not mention how they assist the financial firms in dealing with complaints or what
resources they provide to their members.
Financial firms should be aware that when a complaint is lodged against them by a consumer,
they will be liable to pay costs for the lodgement and for AFCA’s mediation of the complaint. It
does not matter whether or not the complaint has grounds or if the complaint is decided in the
financial firms favour, the member will still have to bear this cost and depending how far the
complaint progresses, the cost will increase.
As an association we are aware of one financial firm that had to pay over $7,000 in AFCA
hearing costs (on top of the compensation awarded to the complainant plus the yearly
membership costs), even though the complainant was not a customer in over 20 years.
Something of great note, AFCA has the ability to decide time limits for complaints, where
normal disputes would be considered time barred by the Limitations of Actions Act, they can
now be heard by AFCA and even receive a favourable determination.
From published final determinations it is clear that AFCA has very broad discretion in making
decisions. Contrary to common belief, a decision made by AFCA cannot be easily challenged. A
financial firm must accept a final determination or challenge it by bringing an action to the
Supreme Court of Queensland or Federal Court of Australia.
Here are our tips on how to deal with a complaint with AFCA:
- Once received do not sit on it, review the complaint thoroughly.
- Check whether or not the complaint is within AFCA’s jurisdiction.
- Check whether the complaint is consistent with AFCA’s Rules.
- Locate all relevant records and material as soon as the complaint is received.
- Consider whether the complaint may reveal any systemic issues and whether a strategic
approach needs to be developed to deal with these issues.
To better understand the powers and jurisdiction of AFCA, we recommend that you read the
AFCA Rules and AFCA Operational Guidelines. This information can be found here.
We encourage you to contact us about how you can best deal with any complaints under AFCA.
Our experience in complaints handling and developing compliance solutions for the financial
services industry ensures we are well-placed to help you navigate complaints and any potential