AFCA has multiple projects underway to enhance our dispute resolution service and improve the experience for members and complainants.
Since the Independent Review report was released, AFCA has used the findings as key inputs into our existing projects to further strengthen their outputs and allow us to effectively respond to the review.
This page includes the latest project update, as well as a summary of all the recommendations and AFCA's response.
For more information on the Independent Review process and final report visit the about the Independent Review page.
December 2023 Update
With one year remaining in AFCA’s response to the Independent Review, the organisation has made significant progress in implementing important initiatives and remains on track to complete its work in responding by the end of 2024.
I am proud to report that, as of the end of the year, work has commenced on all 14 recommendations and we will complete several recommendations when AFCA’s Rules are updated on 1 July. We will share more detailed information about the different changes and communicate them to relevant stakeholders in the coming months.
The work that AFCA has done in the last two years has taken a considered approach to the recommendations from the Independent Review and suggested changes that have transformed the way AFCA operates.
Dr June Smith
AFCA’s new approaches consultation completed
In response to Recommendation 11, we have piloted consultation methods with the development of new AFCA approaches, most recently on our draft Responsible Lending Approach and Appropriate Lending to Small Business Approach, both of which have now been finalised and launched.
AFCA is committed to ensuring we consult in a range of accessible, transparent and inclusive formats, to enable stakeholders to engage in a way that best suits them. In this consultation process we held six separate roundtable discussions with industry and consumer groups, and a public webinar, which received over 300 registrations. We received a total of 25 formal written submissions on the draft Responsible Lending Approach and 17 submissions on the draft Appropriate Lending to Small Business Approach, from a range of industry members, consumer groups and peak bodies. We thank our stakeholders for their participation and for providing us with thorough and insightful feedback and submissions.
AFCA incorporated considerations from the consultations and published both updated final approaches in late 2023 and early 2024. The learnings from this process have been used to create a guide for future AFCA consultations.
For any questions or more information, visit the new approaches consultation page.
AFCA publishes Responsible Lending Approach
AFCA’s final Responsible Lending Approach document has been published, which draws from feedback provided by a range of stakeholders including members, consumer groups, and industry bodies during six weeks of public consultation earlier in the year.
Considering the feedback, AFCA has provided greater clarity and ensure consistency in AFCA complaint outcomes.
Read the final Responsible Lending Approach document.
AFCA conducted a review and consultation on Appropriate Lending to Small Business around the same time as Responsible Lending. The results of that process will be published in early 2024.
Completing the Governance Model for Approach Consultations
AFCA has finalised its governance model for the development of AFCA Approach documents, which covers their complete life cycle including how AFCA consults with external stakeholders.
The need for a clear governance model arose from Recommendation 11 of the Independent Review, which was aimed at helping to identify unintended consequences before an approach was finalised.
The new consultation model was successfully tested with two draft AFCA approaches, including the Responsible Lending Approach discussed in the previous article and Small Business Lending Approach, which was published in early 2024.
In total, we received 25 submissions from our stakeholders for AFCA’s Responsible Lending Approach and 17 for AFCA’s Small Business Lending Approach. All non-confidential submissions have been published on the new approaches consultation page.
Read more at the New Approaches consultation page.
Finalising AFCA’s Forward-Looking Review Mechanism (Recommendation 9)
Recommendation 9 of the Independent Review focuses on enhancing the visibility, accessibility and independence of AFCA’s Forward-Looking Review Mechanism. Our response to this recommendation is nearly finalised.
Forward-looking reviews (FLR) are one way that AFCA can receive and address stakeholder feedback and consider whether to alter its approach to a specific issue raised in a determination.
After reviewing an FLR, AFCA may determine that change is warranted, and it may affect our approach to resolving future complaints. It is not, however, a way to reopen a complaint or review the merits of a past decision.
AFCA shared an update with external stakeholders about the proposed model for the new FLRM governance model at our Member Forum in November 2023. The FLRM will be implemented when AFCA’s Operational Guidelines are updated on 1 July 2024.
AFCA’s Rules and Operational Guideline (OG) Change Consultation
The proposed Rules changes have been submitted to the Australian Securities and Investments Commission (ASIC) for approval. A Consultation Response Paper will be published in early 2024, detailing the overall response to the consultation and the final changes to the Rules and OGs, once the process is finalised.
AFCA adopted a new flexible consultation model to share information in different formats and provide details on the proposed change impact for specific industries, business sizes and consumer groups. We created a state-of-the-art website page, featuring an interactive online consultation paper ensuring a user-friendly and accessible experience for all stakeholders.
More than 1,100 people joined the 33 different consultation sessions. This resulted in 37 formal submissions and nearly 600 bits of informal feedback.
All of this feedback was carefully considered and helped shape the proposed Rules and OG changes that were submitted to ASIC. Once approved the updated Rules and Operational Guidelines will come into effect for complaints lodged on or after 1 July 2024.
AFCA looks forward to updating its stakeholders as this work progresses.
Approach Consultation update (Recommendation 11)
In responding to Recommendation 11, consulting on AFCA approaches prior to finalisation to identify unintended consequences, we have piloted different consultation methods with the development of new AFCA approaches (e.g., Responsible Lending and Lending to Small Business).
This experience has assisted in shaping a governance model for the development of AFCA Approach documents which we undertook with the assistance of an external consultant. We are finalising the governance model which will cover the complete life cycle of an Approach document including how AFCA will consult with external stakeholders. Once finalised, we will update all stakeholders on the governance model.
NEW: latest edition of the Systemic Issues Insights Report (Recommendation 13)
As part of our continued response to Recommendation 13, improving transparency of systemic issues in public reporting, AFCA has launched the latest edition of the AFCA FY22-23 Systemic Issues Insights Report. The information and data included in these quarterly reports is groundbreaking. It provides a range of insights to policy makers, industry and the public that goes to the heart of AFCA’s goal to improve industry practices through the public provision of its data and evidence.
In the reported period, AFCA identified and investigated systemic issues resulting in more than $61 million in remediation being returned to 145,480 consumers. This compares with $38 million returned to 186,924 in the previous report covering July to December 2022.
The report shares data and findings from a range of recent systemic issues cases across the industry, including misreported credit information and poor debt collection practices, inconsistent settling of motor vehicle insurance claims, and inadequate disclosure of increases to life insurance premiums.
Visit www.afca.org.au/about-afca/systemic-issues for more or reach out to the Systemic Issues team at systemicissues@afca.org.au with any questions.
Progress across a range of other Recommendations
AFCA has made significant progress across several recommendations, including:
- Establishing a project team to develop clearer guidance to support consistent treatment of further issues and inform key stakeholders (Recommendation 1).
- A review the implementation of our Fairness Jurisdiction project (Recommendation 2) and has commenced an independent review of a sample of AFCA determinations for matters related to fairness and impartiality (Recommendation 3).
- Developed and published guidance for fee paid representatives about how to engage with our service (Recommendation 4) and progressing a change to AFCA’s Rules, to further clarify how AFCA will manage fee paid representatives.
- A range of work is underway to specifically address timeliness (Recommendation 5), including a continuous improvement program focused on operational efficiency and effectiveness and the implementation of a new complaint management system, including a consumer and member portal. We will continue to report annually on complaints, including on the timeliness of complaints handling. This year, we have published additional data and financial information in our Annual Review to increase transparency of our work and are looking at other ways we can regularly share data with our stakeholders.
- Improved the visibility of the Independent Assessor to all parties to a complaint (Recommendation 10).
- The transformation of AFCA’s systemic issues function, with more work in progress.
- Provided details to stakeholders on AFCA’s role identifying, investigating and reporting systemic issues and the different roles that AFCA and regulators play (Recommendation 12).
Further information
AFCA's response to the Independent Review
AFCA is committed to continuous improvement. It is our goal to be a world-class ombudsman scheme. Prior to the Independent Review, AFCA had already commenced several projects aimed at improving its service. This included our Fairness Jurisdiction Project, transformation of our Systemic Issues function, and investments in new technology, systems and processes.
The Independent Review recommendations – and the areas for improvement identified in the report – provided AFCA with the opportunity to not only progress this important existing work but commence additional projects that would support our goal of becoming a world-class ombudsman service.
Three-year program of work
Following the report, AFCA designed a comprehensive three-year program of work to manage the implementation of the recommendations in a coordinated way. This program of work commenced in 2022 and will conclude at the end of 2024.
To date, AFCA has completed four and made significant progress across another 8 of the 14 recommendations, all of which remain on track for completion by December 2024.
Find out more about the progress made so far below.
Recommendation 1
Dealing with further issues raised during the complaint process
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA should provide clearer guidance on the circumstances under which a further issue identified during the complaint process would revert to financial firms for consideration through internal dispute resolution.
Where the issue is combined with an existing complaint, both parties should be provided with procedural fairness by having the opportunity to comment on changes to the scope of the complaint.
However, in instances where AFCA finds parties inappropriately seeking to add new issues, it should take action to dismiss or curtail such behaviour.
Scope
- Requires preparation of additional guidance to ensure consistency and assist AFCA staff and stakeholders.
- Will also address Joinder.
- Requires change to systems or processes.
- Requires input from stakeholders.
Next steps
- Develop clearer guidance to support consistent treatment of further issues and inform key stakeholders.
- We have now appointed a Project Manager who will look to establish a Project Team to deliver stakeholder engagement, process changes and implementation. The team will include representatives from across AFCA and is scheduled to begin meeting from the planned project commencement date.
Recommendation 2
Ensuring all AFCA decisions consider what is fair in all the circumstances
Completion status
Status: Revised for completion in 2024
Report recommendation
In making its decisions, AFCA should consider what is 'fair in all the circumstances' having primary regard to the four factors identified in its Rules - legal principles, industry codes, good industry practice and previous decisions.
Scope
- Requires change to systems or processes.
Completed work
Fairness Jurisdiction Project
The AFCA Fairness Jurisdiction Project completed its examination of how AFCA applies its jurisdiction throughout our dispute resolution processes. The project delivered resources to AFCA staff, members, complainants and stakeholders to ensure our fairness jurisdiction is clearly communicated to all parties throughout our process. The resources include:
- New Fairness navigation tool which ensures AFCA decision makers are consistent when applying AFCA's fairness jurisdiction to complaints
- New decision templates highlighting AFCA’s approach to fairness when making decisions
- Apprehended Bias Policy, which sets out how AFCA’s people remain impartial when working to resolve complaints
- AFCA’s Engagement Charter, which sets clear expectations for how parties should engage with each other and AFCA to ensure a fair process
- AFCA’s Fairness Jurisdiction Project outcomes report, which provides information on how AFCA ensures these principles are applied consistently and in a way that is fair for members and complainants, and
- Republishing AFCA Approaches to better reflect fairness jurisdiction (completed in May 2022)
- Completion of a post implementation review (PIR) and report of the Fairness Jurisdiction Project, work to ensure project outcomes are being used appropriately.
Independent Decision review
In order to ascertain whether AFCA’s Decisions and processes are operating in a manner which is fair in all the circumstances a decision to review a number of AFCA complaints that went to Determination was made.
- Engagement of expert and independent reviewers for the review of 30 AFCA complaints.
- Identify the criteria for selection and then the actual selection of the 30 complaints for review by the reviewers.
- Creation of the form or matrix for the reviewers to complete for each reviewed complaint.
- Provision of IT support and infrastructure to the reviewers for the project.
- Receipt of 15 of the completed reviews from the reviewers.
Next steps
Fairness Jurisdiction Project
- An ongoing focus to ensure the outcomes of the Fairness Jurisdiction Project are embedded within AFCA and understood by our members, complainants and stakeholders.
- Engagement with the learning and development and knowledge management teams to create interactive and relevant resources to assist staff in ensuring they are operating within AFCA’s fairness jurisdiction.
Independent Decision Review
- Receipt of the final reviews from the reviewers.
- Review and identification of learnings and actions from the report from the reviewers from the AFCA Decision Review.
- Implementation of changes to process or guidelines from the report.
Recommendation 3
Not advocating or acting in a manner that compromises impartiality
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA should not advocate for, nor act in a manner that otherwise advantages, one party such that the impartiality of the complaints resolution process is compromised.
Scope
- Change to AFCA Rules or Operational Guidelines (if required).
- Establish new AFCA Approach (if required).
- Requires change to systems or processes.
- Requires input from stakeholders.
Completed work
- An internal working group is focused on embedding practices that promote impartiality during the complaint process.
- Resources delivered by the AFCA Fairness Jurisdiction Project include the Apprehended Bias Policy, which sets out how AFCA’s people remain impartial when working to resolve complaints.
- AFCA has established a training program on trauma informed and culturally appropriate dispute resolution practices for our teams.
Next steps
- Awaiting the outcome of the review of AFCA determinations from Recommendation 2 which is also assessing whether AFCA is engaging in procedural fairness.
- Review the outcome from the review and final report and create an action plan (if necessary) to address any issues raised.
Recommendation 4
Addressing poor conduct by some paid advocates
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA should address poor conduct by paid advocates affecting the efficiency of the scheme, such as by amending its Rules to allow it to exclude certain paid advocates from involvement in the complaints process. The Government could also consider an amendment to AFCA’s authorisation conditions to support such changes.
Scope
- Requires change to AFCA Rules or Operational Guidelines.
- Requires change to systems or processes.
Completed work
- Updated process and online resources to ensure paid advocates provide the required information and understand our expectations when making complaints on behalf of consumers.
- Internal working group created, focused on updating AFCA Rules and Operational Guidelines, and developing a new future state process with input from key stakeholders.
- Consultation on updates to AFCA’s Rules and Operational Guidelines and supporting information with key stakeholders.
- Feedback from stakeholders received during the consultation period has been reviewed and collated.
Next steps
- The proposed AFCA Rules and Operational Guidelines changes have been finalised and will take effect from 1 July 2024.
- We will create bespoke communications to inform potentially impacted parties of the changes.
Recommendation 5
Improving transparency of timeliness and better managing timeliness expectations
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA should:
- continue to publish data on its timeliness and start publishing data on the full range of complaints it resolves, including those that extend beyond 12 months.
- better manage expectations around timeframes in its communication with parties to a complaint.
- focus on improving the timeliness of complaints that remain unresolved beyond 12 months.
Scope
- Requires change to systems or processes.
Completed work
- Continued focus on improving timeliness of unresolved complaints, including closure of complaints extending beyond 12 months.
- Review of available timeliness information for complaints to enable assessment of data solutions that will improve transparency.
- AFCA has implemented strong governance and oversight to reduce the volume of aged complaints (complaints or cases greater than 365 days from lodgement). This has seen the establishment of:
- Regular ‘aged case clinics’ which involves collaboration between key AFCA areas to troubleshoot complex aged complaints and develop options to progress and resolve.
- Regular reporting and performance tracking on aged complaints.
- An aged complaints reporting predictor which supports proactive monitoring and aids in the early intervention of complaints at risk of becoming aged.
- A Lead Ombudsman leading the work on aged complaints.
These measures have delivered a significant reduction in aged complaints. As of 1 June 2023, open aged complaints accounted for 0.9%, down from a high of 4.7% on 1 September 2021.
Existing work underway
- Development of a new case management system.
- Updating website to display how long it is taking for cases to move to completion from different stages in the AFCA process.
Next steps
- Continue review of available timeliness information with the aim to improve transparency and set better expectations with parties to a complaint.
- Update systems to improve timeliness information and establish service standards for complaint handling.
Recommendation 6
Complaints by sophisticated or professional investors
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA should exclude complaints from sophisticated or professional investors, unless there is evidence that they have been incorrectly or inappropriately classified.
Scope
- Requires change to AFCA Operational Guidelines.
- Requires change to systems or processes.
- Requires input from stakeholders.
Completed work
- An internal working group, focused on addressing how AFCA responds to complaints from sophisticated and professional investors, has reviewed our approach and drafted a proposed change to the AFCA Operational Guidelines.
- Consultation on updates to AFCA’s Operational Guidelines and supporting information with key stakeholders.
- Feedback from stakeholders received during the consultation period has been reviewed and collated.
Next steps
- The proposed AFCA Rules and Operational Guidelines changes have been finalised and will take effect from 1 July 2024.
- AFCA will create bespoke communications to distribute to parties that may be impacted by the Rules changes.
Recommendation 7
Ensuring funding model design does not disincentivise firms from defending complaints
Completion status
Status: Completed in 2022
Report recommendation
AFCA’s funding model should not disincentivise financial firms from defending complaints they consider do not have merit and should better take into account the circumstances of small financial firms.
Completed work
- On 1 July 2022, AFCA implemented its new funding model. The new model addresses recommendation 7 through several features which aim to remove any inadvertent disincentives to proceed through our dispute resolution process, and to remove financial pressure from small financial firms. These features include:
- Five free complaints each financial year
- A single annual flat registration fee of $375.55 for financial firm members, and $65.98 for Authorised Credit Representatives, and
- A simplified complaint fee structure that reduces complexity and reduces complaints fees.
- A comprehensive review of the model has been completed, indicating the funding model is operating as intended and has achieved its objectives of being efficient and sustainable. For more information visit the AFCA funding model page.
- Members have been issued their first year of invoices under the new fee structure.
- AFCA continues to review its processes to support members and consumers to resolve complaints as early as possible in a fair and transparent way, including the recent development of proposed guidelines which will help parties accept reasonable offers of settlement and resolve complaints more efficiently.
Recommendation 8
Improving transparency of AFCA fees and the services and activities they fund
Completion status
Status: Completed in 2022
Report recommendation
AFCA should improve the transparency of its fees for financial firms and how the fees are being used to support AFCA’s activities.
Completed work
- Simplified fee structure in the new AFCA funding model allows members to more easily understand the fees incurred by complaints at different stages of our process. For more information visit the AFCA funding model page.
- New financial information published in the AFCA 2021–2022 Annual Review illustrates how funds are spent to support the delivery of AFCA's service.
- Comprehensive review of our funding model:
- AFCA’s new funding model has now been in place for more than a year. We completed a comprehensive review of the model, which indicates it is operating as intended and has achieved its objectives of being efficient and sustainable.
- Actual fees and the distribution to members closely aligned to the modelling completed as part of the design of the new model during the 2022 financial year. At the end of FY23, AFCA landed with a 54% fixed and 46% variable funding model, allowing for more variability in AFCA’s funding. The ‘user-pays’ feature is functioning as expected with the heaviest users of AFCA’s service paying their fair share.
- AFCA saw a significant increase in complaint volumes during the year. The review found the proportion of complaints closed at each stage have remained relatively stable year on year, indicating the model has not driven a change in behaviour from members or consumers because of published and reduced fees.
Recommendation 9
Enhancing visibility, accessibility and independence of the forward-looking review mechanism
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA determinations should continue to not be subject to merits review, but the substance of a determination should be reviewable with respect to its application to future cases. To this end, AFCA should enhance the visibility, accessibility and independence of its existing forward-looking review mechanism.
AFCA should amend its Operational Guidelines to remove the requirement for an applicant to demonstrate an error of law to access the formal forward-looking review mechanism. Applicants should be able to access it if they are able to demonstrate that the AFCA determination adopts an approach that could have a significant impact across a class of consumers, businesses or transactions.
Scope
- Requires change to AFCA Operational Guidelines.
- Requires change to systems or processes.
- Requires input from stakeholders.
Next steps
- Consultation on proposed changes to AFCA’s Operational Guidelines has taken place. Changes will take effect from 1 July 2024.
- We are finalising the governance and cost contribution models for the forward-looking review mechanism.
- Updates will be published confirming the process for requesting a forward-looking review.
- Confirm contribution models and fees, and communicate those to relevant stakeholders.
Completed work
- Completed a change impact strategy to help transition impacted stakeholders.
- Updates provided to ASIC, APRA and Treasury on FLRM and Approach document models.
Recommendation 10
Improving visibility of the Independent Assessor to all parties to a complaint
Completion status
Status: Completed in 2022
Report recommendation
Complaints about AFCA’s service should remain the responsibility of the Independent Assessor. AFCA should improve the Independent Assessor’s visibility as part of its communications with parties to a complaint.
Scope
- Requires change to systems or processes.
Completed work
- Updated communications to both consumers and members about how to provide feedback and the Independent Assessor function.
- Enhancements to public resources include:
- Updated information about the service complaints process and the Independent Assessor have been published on the AFCA website, including new videos for members, consumers and stakeholders.
- Information about AFCA’s service complaints process and the Independent Assessor is now available in 19 languages to improve accessibility on the AFCA website.
- Improved AFCA website navigation and enhance webpages accessibility through search engine optimisation to make it easier to find information about the Independent Assessor.
- Improved the Independent Assessor’s report in the Annual Review and developed a new factsheet.
- Enhancements to member specific channels include new resources and links on the member portal, communications to members and the member satisfaction survey.
- Enhancements to uplift internal visibility include review of resources, updated staff training modules and completing several staff presentations. We also developed new workforce planning tools to ensure AFCA is appropriately resourced to meet and maintain service levels for service complaints.
The Independent Assessor presented to consumer representative organisations and will be presenting at future stakeholder forums.
Recommendation 11
Consulting on AFCA Approaches prior to finalisation to identify unintended consequences
Completion status
Status: On track for completion in 2024
Report recommendation
AFCA should ensure consultation is undertaken on each Approach Document prior to final publication.
Scope
- Requires change to systems or processes.
Completed work
- Researched options for improving future consultations with input from key stakeholders.
- Piloted consultation process with two recent new draft approaches: Responsible Lending and Small Business Lending.
- Developed a governance model for our consultation process.
Next steps
- Publishing an update setting out the consultation process for finalising an approach document.
- Engaging on a consultation calendar for Approach documents for the year ahead.
Recommendation 12
Systemic issues that have been referred to ASIC or another regulator
Completion status
Status: Completed in 2023
Report recommendation
Where a systemic issue has been referred to ASIC or another regulator, AFCA should cease its investigation of the systemic issue. ASIC and other regulators should advise AFCA of the outcomes of the referrals they receive. However, AFCA should continue to resolve any relevant individual complaints.
Scope
- Requires input from stakeholders.
- Respond to Systemic Issues recommendation.
- Change to AFCA’s Operational Guidelines (if required).
- Change to systems or processes (if required).
Completed work
- AFCA had completed its own review of the systemic issues function prior to the independent review and initiated the Systemic Issues Transformation project in part to address the different roles AFCA and regulators play.
- Engagement with ASIC and Treasury to address this matter.
- Developed assets to tell the AFCA Systemic Issues story to a diverse group of stakeholders, including a new member pack.
Next steps
- Continue engagement with stakeholders addressing our role in managing systemic issues and providing public transparency about systemic issues and outcomes.
- Further develop our focus and understanding of Recommendation 12 in the context of the current broader regulatory framework, as well as the investigations and insights from work delivered for Recommendation 13.
- Develop an implementation plan and stakeholder engagement.
Recommendation 13
Improving transparency of systemic issues in public reporting
Completion status
Status: Completed in 2022
Report recommendation
AFCA should be more transparent in its public reporting of systemic issues, including on a de-identified basis as appropriate. This would encompass factors such as the industry to which the systemic issues relate, the nature of the complaints, the number of affected consumers, total value of remediation and reporting to the regulators.
Scope
- Requires change to systems or processes.
Completed work
AFCA had completed its own review of the systemic issues function prior to the independent review and initiated the Systemic Issues Transformation project which addresses public reporting.
Increased the visibility of systemic issues with input from ASIC and communicated to key stakeholders. This included launching the second edition of the AFCA FY21-22 Systemic Issues Insights Report, which features data and findings from a range of systemic issues cases across the financial services industry and provides an opportunity for members to learn from others’ experiences. The report is released bi-annually.
Recommendation 14
Amending legislation to no longer require authorised credit representatives to be AFCA members
Completion status
Status: Legislative change required.
Report recommendation
The National Consumer Credit Protection Act 2009 should be amended to no longer require authorised credit representatives to be members of AFCA.
Scope
- Requires change to AFCA Rules or Operational Guidelines.
Next steps
- Awaiting Government direction.
- Investigate membership options and impacts, and update AFCA Rules and Operational Guidelines (if required).
