We have recently submitted numerous complaints with the Australian Financial Complaints Authority, otherwise known by the acronym AFCA, on behalf of clients. Clients have expressed interest in going down this path as an alternative to commencing legal proceedings and as such we thought that it would be of interest to write a short article outlining the following:

  • The role of AFCA and the types of disputes that AFCA considers;
  • The AFCA process; and
  • The advantages and disadvantages of making a complaint to the AFCA as opposed to commencing proceedings in a court of law.

The role of AFCA and the types of disputes that AFCA considers:

The AFCA provides a free, independent and informal service to help consumers and small businesses[1] resolve disputes that they have with a financial firm[2].

The AFCA deals with financial disputes against financial firms relating to: –

    1. Credit, finance and loans
    2. Insurance products and services
    3. Banking deposits and payments
    4. Investments and financial advice
    5. Superannuation

If you have a complaint against a financial firm relating to any of the above, you should be entitled to pursue your claim by making a complaint to the AFCA.

The AFCA process

The AFCA was established by the Commonwealth Government in response to the report of an independent review panel which it commissioned to consider the financial system’s external dispute resolution and complaints framework.

The AFCA process is quite straight forward and AFCA guides consumers and small businesses through every step of the process. A complaint form can simply be downloaded from the AFCA website and submitted online. Whether legal representation is required to assist in making and pursuing a complaint with the AFCA will depend on the nature of the complaint.  For more complex claims that involve significant breaches of various areas of law and where a substantial amount of money is being claimed it is recommended that legal assistance be obtained. In these more complex cases, we can prepare lengthy and detailed written submissions to the AFCA setting out all of the claims available to ensure that the complaint is appropriately considered and the AFCA is provided with all of the relevant information required to resolve the complaint.

Once a complaint has been submitted to the AFCA, the AFCA will notify the financial firm and will request any further information that it requires from the parties to consider the complaint. The AFCA generally gives the parties 21 days to respond to its requests.

A date is then scheduled for a conciliation conference, where the parties are encouraged to negotiate and resolve the dispute. If the dispute is not resolved, the case manager allocated to the complaint will make a preliminary assessment. If one of the parties does not accept the preliminary assessment the complaint will be referred to an internal Ombudsman to make a binding determination. If the binding determination is made in the complainant’s favour and the complainant accepts it, the financial firm must comply with the binding determination. If the consumer or small business does not accept the binding determination, the consumer or small business can refuse to accept the determination and can commence proceedings in a court of law[3].

Advantages of the AFCA process

The AFCA process is quicker, cheaper and more informal than the judicial process. It can be said that the AFCA essentially provides ‘justice on the papers’. That is, the AFCA makes a determination based only on a review of all of the relevant documentation and written submissions provided to it by the parties. No oral evidence or submissions are heard by the AFCA, which is the reason why the AFCA is able to make a determination far quicker than a court of law. We think that this streamlined process is extremely beneficial as it enables our clients to attempt to resolve their dispute in the most time and cost effective way possible. While there is a risk that there might ultimately be gaps in the evidence this risk is mitigated by the fact that the complainant is not bound by the AFCA’s determination. If the AFCA considers that it cannot make a determination in favour of the complainant, the determination does not prevent the complainant from pursuing its claim in a court of law.

Further, where a consumer or small business makes a complaint against a financial firm and the AFCA does not find in the consumer of small businesses’ favour, each party walks away bearing its own costs. As such, by opting to use the AFCA process, a consumer or small business eliminates the risk of an adverse costs order.  Likewise, a financial firm cannot seek to recover any other costs associated with the AFCA’s consideration of the complaint or any costs associated with any expert report being provided in connection with the complaint.

Additionally, if a financial firm has brought proceedings against the consumer or small business and the consumer or small business has a defence, but does not want to incur the cost of defending the matter through the court process, the consumer or small business can make a complaint to the AFCA. Once a complaint has been made to the AFCA, the financial firm cannot continue legal proceedings about any aspect of the subject matter of the complaint and cannot execute a default judgment or pursue debt recovery until the matter has been determined by the AFCA. Any proceeding must be stayed without cost to the complainant.

Disadvantages of the AFCA process

The maximum amount that the AFCA will award for legal costs is $5,000. For complex complaints that require the involvement of lawyers, the legal costs are more than likely to exceed the $5,000 threshold. However, the overall process of resolving the complaint will still remain cheaper and faster than going through the adversarial system.

Further, for most disputes, the AFCA can award a maximum of $1,000,000 for financial loss, and there are caps on the amount of compensation that the AFCA can award per claim.[4]  If the loss or compensation claimed is greater than $1,000,000 then it will likely be more appropriate to commence court proceedings.

Finally, the AFCA might determine that it cannot deal with certain complaints. However, the AFCA will not exercise its discretion to exclude a complaint lightly.[5]  The discretion will only be used in cases where there are compelling reasons to exclude a complaint. For example, where a complainant is seeking to reopen a complaint after entering into a settlement, where the AFCA considers that the only way to determine the issues raised by the complaint would be for a third party to give evidence subject to cross-examination, or where a complaint contains multiple interrelated claims, some of which are within the AFCA’s jurisdiction and some of which are not. While complexity is also relevant, this is not a sufficient reason alone for the AFCA to exclude a complaint.


Overall, we have found that we have increasingly started to use the AFCA process on behalf of clients, as an alternative to commencing proceedings in court. We have found the AFCA process to be efficient and cost effective and this in turn has enabled our clients to avoid the stress and delay often associated with going through the court process.

If you think you have a claim against a financial firm, feel free to contact us and we can let you know whether the AFCA process is suitable to you.

[1] AFCA defines a small business as an organisation with less than 100 employees. This can be a partnership, incorporated trustee or a company, as well as not for profit organisations or clubs that are not registered charities.

[2] All Australian financial services licensees, Australian credit licensees, authorised credit representatives and superannuation trustees are required to be a member of the AFCA under their financial services licence conditions, in accordance with ASIC Regulatory Guide RG 165.

[3] This is the general process that AFCA follows, however, depending on the nature of the claim the AFCA may choose to follow a different process.

[4] For most complaints the AFCA can award a maximum of $1,000,000. However, the amount that the AFCA can award is dependent on the type of complaint being made, for example, there is no cap on the amount that the AFCA can award to where a complaint relates to superannuation. Further, for certain claims regarding credit facilities the monetary restriction on the AFCA’s jurisdiction is $5,000,000. Please contact us and we can advise as to AFCA’s monetary jurisdiction depending on your individual complaint.

[5] Australian Financial Complaints Authority (AFCA) Complaint Resolution Scheme Rules C.1.2 and C.2.