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.
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 eight recommendations with two more to be closed when we update our Rules on 1 July 2024. We remain on track to finalise the remaining three recommendations by the end of 2024.
Find out more about the progress made so far below.
Further information
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.
Completed work
- Preparation of internal guidelines to support consistent treatment of further issues has been completed.
- Completed work on Joinder.
Next steps
- Deliver internal training to staff on how to deal with further issues that arise during a complaint.
- Inform key stakeholders of how AFCA will approach further issues that arise during a complaint.
Recommendation 2
Ensuring all AFCA decisions consider what is fair in all the circumstances.
Completion status
Status: On track 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 existing resources and 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), and
- The post implementation review (PIR) has been completed including a review 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 all of the completed reviews from the reviewers.
- Receipt of final report from 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. This has led to some work on providing further guidance for the use and completion of reasoning tables.
- 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
- Precis from Reviewers summarising and de-identifying their report.
- Presentation of Final Report and Management Response to the AFCA Board.
Recommendation 3
Not advocating or acting in a manner that compromises impartiality.
Completion status
Status: Completed 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.
- External review of AFCA determinations from Recommendation 2 to make sure that the benchmark set by the Independent Review is being met or exceeded.
Next steps
- We will be sharing the outcomes of the external 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: To complete with Rules update on 1 July
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.
- Requires input from stakeholders.
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 changes to AFCA’s Rules and Operational Guidelines have been approved by ASIC and will take effect from 1 July 2024.
- We will create bespoke communications to inform impacted parties of the changes.
- Hosting a webinar for paid advocate groups to outline Rules changes and expectations.
Recommendation 5
Improving transparency of timeliness and better managing timeliness expectations
Completion status
Status: Completed 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
Related to aged complaints
- 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).
- 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.
Other completed activities
- Development of a new case management system (CMS), which will provide greater visibility on timeframes at various case stages.
- Updated information on the AFCA website about how long it takes for cases to move from different stages in the AFCA process.
- Implemented a communications strategy to manage consumer expectations about complaint timeframes, including introducing outbound touchpoints early in the process and revising outbound correspondence with clearer explanations of what consumers can expect when they lodge a complaint with AFCA.
Next steps
- Continue other targeted operational initiatives to reduce complaint queues and complaint resolution timeframes.
Recommendation 6
Complaints by sophisticated or professional investors.
Completion status
Status: To complete with Rules update on 1 July
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.
- AFCA leads have commenced conversations about Rules changes including reference to classifying wholesale and sophisticated investors.
Next steps
- The changes to AFCA’s Rules and Operational Guidelines have been approved by ASIC 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. Work will commence on these communications in May 2024 and will be completed no later than 31 May 2024.
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.
Completed work
- We have consulted on proposed changes to AFCA’s Operational Guidelines, which will be updated from 1 July 2024.
- Updates provided to ASIC, APRA and Treasury on FLRM and Approach document models.
Next steps
- We are finalising the governance and cost contribution model for the forward-looking review mechanism.
- Updates will be published confirming the process for requesting a forward-looking review.
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: Completed 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 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.
- Publishing a proposed Annual Approach Schedule for the 2024/2025 financial year for stakeholder feedback.
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.
- Engagement with key stakeholders to share and test key messages about AFCA’s systemic issues role. The feedback received was neutral to positive.
- Met with Treasury to close the loop about the key stakeholder engagements and AFCA’s systemic issues role messaging acceptance.
- Plenary session at the March 2024 Member Forum provided key messages about AFCA’s systemic issues function, available to all members. The new systemic issues member resources launched at the Member Forum align with and include the updated messaging around AFCA’s systemic issues role.
- Recommendation 12 and 13 Closure Report was tabled at the Independent Review Response Program Board March 2024 meeting.
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).
March 2024 update
With less than nine months left of what has been a significant program of work under AFCA’s Independent Review response, I'm delighted to share that we’ve now responded fully to eight of Treasury’s recommendations, with two more to be closed when we update our Rules on 1 July 2024.
This quarter, AFCA achieved some notable milestones. We launched AFCA's Approach to Lending to Small Business, which also marks the completion of Recommendation 11 by setting out the consultation process for finalising an Approach document. This accomplishment represents a big step forward in simplifying our processes and enhancing how we engage with stakeholders.
ASIC has formally approved material changes to AFCA’s Rules and Operational Guidelines, marking the culmination of extensive consultation efforts undertaken in 2023. These changes, effective 1 July 2024, will bolster AFCA’s ability to manage disputes effectively and provide clearer guidance on our jurisdiction and processes.
The transformation of our operations in the last two years has been remarkable. We’re on track to complete all our objectives and respond to all recommendations in full by the end of the year.
Dr June Smith
AFCA’s Approach to Lending to Small Business is now live
AFCA published its final Lending to Small Business Approach document (formerly known as Appropriate Lending to Small Business) on 15 January 2024, alongside a consultation feedback report that outlines how we responded to formal submissions and stakeholder feedback. All non-confidential submissions were published in November 2023. The final Responsible Lending Approach document was also published in December 2023.
The Approaches were developed in response to calls from stakeholders to provide greater clarity around AFCA’s existing approach and to ensure consistency in AFCA complaint outcomes in these complex areas. To ensure it is meeting the needs of stakeholders and is not producing any unintended outcomes, we intend to check in on the operation of both Approaches in 2024. We will provide more information about the format of this review closer to the time.
Training on both Approaches has been rolled out. There are online training modules and face-to-face training is being delivered to relevant case management teams and the Industry Advisors.
We have also finalised the governance model for developing AFCA Approach documents, which responds to Recommendation 11 of the Independent Review. This comprehensive model encompasses the entire life cycle of an Approach document, including outlining our process for consulting with external stakeholders.
AFCA Rules changes approved by ASIC
ASIC has formally approved material changes to the AFCA scheme following the consultation on changes to AFCA’s Rules and Operational Guidelines in 2023. New versions of AFCA’s Rules and Operational Guidelines will be published on 1 July 2024 with changes that will:
- Increase AFCA’s ability to manage unreasonable or inappropriate conduct within the scheme from Complainants and Paid Representatives
- Deal with complaints where an appropriate offer of settlement has been made or where issues in dispute have been previously settled
- Provide further guidance and clarity on the exclusion of complaints lodged by professional or sophisticated investors unless exceptions apply
- Enhance the visibility, accessibility and performance of the Forward-Looking Review Mechanism
- Clarify the effect of AFCA determinations and how the slip rule works to ensure greater transparency and understanding of AFCA’s decision making
- Make minor changes to definitions and language to update certain areas of the Rules arising from legislative change, to give greater clarity and transparency of the scheme’s operation overall, and
- Make minor changes to clarify AFCA’s reporting and transparency obligations.
These changes were developed in response to recommendations made in Treasury's Independent Review of AFCA – with some additional changes to help ensure our Rules and Operational Guidelines remain accurate, up-to-date and provide clearer guidance about AFCA’s jurisdiction and processes.
This was the most significant review of AFCA’s Rules and Operational Guidelines since AFCA was established. The proposed changes to the Rules and Operational Guidelines were designed to implement the Review’s recommendations and ensure AFCA continues to provide efficient, timely operations so we can deliver fair, independent and effective solutions for financial disputes.
More information about next steps will be shared with our members and stakeholders soon.
Latest Systemic Issues Insights Report
AFCA has launched its latest Systemic Issues Insights Report for July to December 2023.
In the reported period, AFCA identified and investigated 111 systemic issues resulting in more than $40 million in remediation being returned to 139,011 consumers. This is compared with $61 million returned to 145,480 in the previous report covering January to June 2023.
The report shares data and findings from a range of recent systemic issues cases across the industry, including:
- Failure to respond to complaints within the required timeframes
- Compliance with obligations under AFCA Rules
- Breach of policy terms
- Poor claims handling, and
- Incorrect cancellation of insurance cover.
The report is part of AFCA’s ongoing commitment to transparency around AFCA’s systemic issues function coming out of Recommendation 13.
For more information, visit AFCA’s Systemic Issues page.
New member resources on systemic issues
AFCA’s Systemic Issues team launched a new suite of member tools and resources, now available on the member resources page. These resources are designed to support member firms in navigating and effectively addressing possible systemic issues. Here’s what’s included:
- Member response guide: A comprehensive tool to assist members in providing the necessary information to senior systemic issues specialists, ensuring a best practice response or submission.
- Guide to systemic issues: Gain insights into AFCA’s Systemic Issues function, including how we work with firms and regulators to identify, report, investigate and resolve systemic issues. Learn about common causes and examples of possible systemic issues.
- Process fact sheet: Access AFCA’s Systemic Issues process flow chart, offering a clear overview of how we identify and assess possible systemic issues and how we work with firms to address them.
- Systemic Issues video: A short learning snap that tells you about systemic issues and how we work alongside firms and regulators to identify, address and resolve possible systemic issues.
These resources, along with AFCA’s Systemic Issues Insights Reports, serve as a central learning hub where members and other stakeholders can learn about AFCA’s Systemic Issues function and how to respond to potential systemic issues. They have been developed as part of our ongoing commitment to enhancing our services and in part respond to Recommendations 12 and 13 of the Independent Review.
The Independent Review Recommendations related to systemic issues came about due to feedback from stakeholders who were concerned about a perceived overlap in role between AFCA and ASIC, and in an external environment in which new breach reporting obligations are expected of financial firms. Firms were concerned that there was a duplication in work by reporting to ASIC and working with AFCA on systemic issues.
We will close an investigation where we become aware that a firm has reported an issue to ASIC and the firm is engaging with ASIC on the same issue and for the same outcome. This is to ensure we prevent actual overlap and reduce the risk of duplication. Financial firms should let us know as early as possible if they have breach reported the same issue to a regulator.
For more information, please visit the systemic issues webpage or the member resources page.
Progress across a range of other recommendations
AFCA has made significant progress across several recommendations, including:
- Preparation of guidelines to support consistent treatment of further issues is underway (Recommendation 1).
- Independent Decision Review draft report has been received assessing fairness and impartiality for a sample of AFCA determinations (Recommendations 2 & 3) an internal review is underway which will result in management responses being agreed and implemented.
- Two recommendations are being finalised following ASIC’s approval of changes to AFCA's Rules and Operational Guidelines, for complaints lodged on or after 1 July 2024 (Recommendations 4 & 6).