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AFCA: A new era in financial services dispute resolution

On 1 November 2018 we opened the doors of the Australian Financial Complaints Authority (AFCA), a significant milestone for the financial services industry. AFCA is the new ombudsman scheme replacing three predecessor organisations – the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the work of the Superannuation Complaints Tribunal.

AFCA is a key recommendation of the 2016 Ramsay Review into external dispute resolution. The review recommended a simplification of the duplicative industry ombudsman schemes that consumers and small businesses previously had to navigate. AFCA is designed to make it easier to access the scheme as a one-stop shop, delivering services to Australians that are easy to use, free for complainants, efficient, timely and most importantly - fair.

AFCA is a membership-based ombudsman scheme, and all Australian Financial Services Licensees, Australian Credit Licensees, superannuation trustees and other financial firms that are required to become members of AFCA by law, contribute to its operation through membership levies and complaint-related charges.

Focus on efficiency

AFCA’s complaint resolution ensures ease of navigation and efficiency for consumers and small businesses. Whenever possible, there is one case handler and an ombudsman who deal with each complaint.

Their investigation process assesses the issue and gathers relevant information from the parties. Information is exchanged to ensure that each party can respond to the other’s material and that there are no surprises.

AFCA resolves complaints using a variety of techniques including negotiation and conciliation, and will engage with the parties in question to determine the most effective method.

Increased jurisdiction

AFCA has increased monetary limits and higher compensations caps, including a new superannuation jurisdiction. This increased scope means that more consumers and small businesses will now be able to access AFCA and obtain fair and effective solutions for financial disputes, rather than having to navigate multiple schemes or go to court.

For superannuation disputes there is no financial limit on claims or on compensation that can be awarded. For most non-superannuation disputes involving consumers, AFCA can consider disputes where the claim does not exceed $1 million and can award compensation of up to $500,000. Where the dispute relates to a guarantee given against a person’s place of residence there is no monetary restriction or compensation limit.

Small businesses are now defined as any business employing less than 100 employees and AFCA can consider claims relating to credit facilities of up to $5 million. Any charity registered with the ACNC can use the AFCA service, irrespective of the number of employees.

These new thresholds are a game changer and mean that the many disputes that couldn’t be resolved by the predecessor organisations can now be handled by AFCA.

AFCA is now the largest external complaints resolution organisation in Australia, with over 550 expert staff, including 22 Ombudsmen, 14 Adjudicators and 28 Panel Members. We are well resourced and need to be in order to handle the 1,000 or so disputes a week coming our way.

The Royal Commission

The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry exposed significant failings across the financial services industry. It also highlighted the significant impact that financial firms’ practices have had on consumers and small businesses.

We are acutely aware that there is an individual story behind every complaint that is raised. In many cases, it is a story of not just financial loss but also of the human toll of stress, anxiety and ill health, which has flow-on effects, beyond the people involved in disputes, to the community more generally.

Many people who engage with the financial services industry for both business and personal reasons have strong and successful relationships with their financial firm, be that their insurer, bank or financial adviser. The vast majority of these interactions are based on the financial firm doing the right thing, and the relationship is built on mutual trust. But when things do go wrong, they can be catastrophic and enact a huge personal and business toll.

Rebuilding trust

Financial firms that are AFCA members understand that regaining customer trust is important to the survival and health of their industry. And consumers and small businesses expect that, at a  bare minimum, financial firms will do the right thing by them.

We cannot even start to rebuild trust in financial institutions unless consumers with complaints have somewhere to go to get fair consideration of their issues and proper redress where appropriate. This is where AFCA comes in.

Of course, it is always preferable for complaints to be resolved by the financial firms themselves. All financial firms need to have clear and easy to access internal dispute resolution (IDR) processes to rectify issues early when things go wrong. We proactively work with members to support them in delivering improved IDR that will result in improved relationships with consumers.

AFCA is a wholly new vision, part of a much bigger picture to restore trust in financial services. AFCA will have a strong voice and will use our data and experience from our disputes work to better inform the community.


Remediation programs established by financial firms provide a way for these firms to identify issues and compensate those affected, without the need for the consumer to make a complaint to us. They are a proactive mechanism for acknowledging and compensating for an error when it occurs.

AFCA will become aware of a remediation program through a variety of channels and will also independently assess remediation outcomes if consumers have any ongoing concerns.

As we have seen in the Royal Commission, delay in responding to issues has consequences for reputation and consumer outcomes. Well-run remediation programs can help restore trust between financial firms and their customers. When the programs are implemented properly, and in accordance with the principles that AFCA would apply, we would expect to see very few follow up complaints.

Compensation scheme of last resort

Unfortunately, many consumers who obtained a determination from FOS and CIO have not had compensation paid to them after a favourable outcome through external dispute resolution (EDR). Over the last eight years approximately 270 people have found themselves in this situation.

This occurs typically when the financial firm has gone into liquidation or administration, or when adequate compensation arrangements of the licensee fail to respond.

To address this, AFCA supports the establishment of a compensation scheme of last resort. We see this as the missing piece of the puzzle to address the regulatory gap that currently exists in consumer protection arrangements.

What can often get lost in this discussion is the impact that losses and unpaid compensation awards have on the lives of individual consumers, their families and small businesses.

We acknowledge the need for a compensation scheme of last resort to provide access to justice for consumers who do not receive awarded compensation for financial loss.

A compensation scheme of last resort should provide a material degree of protection for financial services consumers and small businesses who have not been paid an eligible AFCA determination or award owed to them by a financial firm.


David Locke is Chief Ombudsman and Chief Executive Officer at Australian Financial Complaints Authority. Complaints can be made online at, by emailing or by phoning 1800 931 678.


A right royal collection from the Commission

Thanks for the Royal Commission feedback


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