Annual Review 2021–22

Independent Review project highlights

Fairness and approaches – recommendations 2 and 11

In 2019, prior to the Independent Review, AFCA launched its Fairness Jurisdiction Project to provide staff, our members and complainants greater certainty about how we operate our fairness jurisdiction. Following significant consultation with stakeholders over a two-year period, in May 2022, we published the Fairness Jurisdiction Project Outcomes report. This outlines the resources AFCA has developed to ensure its fairness jurisdiction is well understood and that it is applied consistently and independently, and in a way that is fair for all parties.

These include:

  • benchmarking AFCA’s jurisdiction both domestically and internationally
  • a new Fairness Jurisdiction Tool that ensures AFCA can discuss important issues for resolution with the parties in plain language
  • new decision templates to clearly explain how AFCA has applied the fairness tests in its complaint handling and why decisions made are fair in all the circumstances
  • an apprehended bias policy to ensure AFCA’s people remain impartial when working with the parties to resolve complaints
  • the AFCA Engagement Charter that clearly sets expectations of how parties should engage with each other and AFCA to ensure a fair process
  • a revised AFCA Approach library providing members and complainants with easy-to-understand information about how we handle specific types of complaints
  • new processes to calculate and capture fair outcomes once achieved.

The AFCA Independent Review also contained a recommendation that AFCA should ensure consultation is undertaken on each Approach document prior to final publication.

AFCA is already working on several Approach documents and will be consulting with members, industry and consumer groups on these over the coming year.

Case management merits assessment (Rule A.8.3) – recommendations 4 and 7

AFCA’s new process for applying AFCA Rule A.8.3 is another critical project, which supports recommendations 4 and 7 of the Independent Review. It focuses on addressing poor conduct by some paid advocates and ensuring our funding model design does not disincentivise firms from defending complaints.

AFCA conducted a pilot program between 1 April and 30 June 2021 that assessed the merit of certain kinds of complaints at the very early stages of our Fast Track system.

The pilot program was in direct response to stakeholder feedback, with some members telling us the cost of paying for a determination on complaints that lacked merit can outweigh the initial service or product offered to a customer. As a result, some members found they were accepting complaints for commercial reasons, rather than fairness.

After a successful pilot program, AFCA has now made its Case Management merit assessment a permanent feature of our process, allowing us to assess complaints without merit through Case Management and use our discretion under Rule A.8.3 to decline to consider the complaint.

Under Rule A.8.3, AFCA can cease consideration of a complaint in circumstances where the:

  • complaint is without merit
  • complainant has suffered no loss (or has been appropriately compensated for such loss and AFCA would not award any further amount)
  • financial firm has committed no error.

This means in circumstances where a complaint may be within jurisdiction and has proceeded to Case Management, an AFCA case worker will consider the nature of the complaint and supporting information to decide if it is appropriate to consider the complaint further.

Between 1 July 2021 and 30 June 2022, AFCA considered more than 840 complaints under this new process.

The Member Benchmarking Dashboard has recently been updated so that members can view closures by Rule A.8.3 Case Management merit assessments.

This will provide greater visibility to each member on how many complaints close every month because a merits assessment was issued, as well as a trend over time.

Timeliness – recommendation 5

Recommendation 5 of the Independent Review outlines how AFCA can improve transparency and reporting of timeliness. Specifically, it says 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.

AFCA already has a range of work underway to address recommendation 5, including a continuous improvement program focused on operational efficiency and effectiveness. This includes replacing our complaint management system and upgrading the Member Portal as part of our IT transformation project. We also have an internal working group focused on addressing aged complaints.

Significantly, the average time to resolve a dispute is down from 76 days in 2020–21 to 72 days in 2021–22. This is a great result and indicates that AFCA’s recent work is having an impact on complaint closures and shows that members are continuing their efforts to resolve complaints in a timely manner. Last year, AFCA developed an Engagement Charter to summarise what it expects from all users of its service, including AFCA.

This document has helped us manage challenging behaviours that also create delays in resolving complaints.

We have made significant progress on closing aged cases in the last 12 months, reducing these cases from 4% of all complaints at AFCA to just 2.4%. Upcoming work, especially within our IT transformation program, will continue to improve timeliness.

It is important to also recognise the need to balance reducing the age of complaints with the needs of complainants. Some complainants require additional assistance and time in order for the process to be fair. In April, we updated our Operational Guidelines to reflect changes to how and when parties to a complaint can request an extension of time to resolve a complaint during the refer back period.

In terms of transparency, our IT transformation work will also allow us to use data, analytics, and automation to improve processes and provide greater insights on complaints and how they progress though AFCA’s process.

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 this Annual Review to increase transparency of our work and are looking at other ways we can regularly share data with our stakeholders.

Sophisticated investors – recommendation 6

Recommendation 6 of the Review states AFCA should exclude complaints from sophisticated or professional investors, unless there is evidence that they have been incorrectly or inappropriately classified.

AFCA has established a dedicated internal working group focused on addressing how we respond to these complaints. In the coming year AFCA will provide more clarity about the process and how it will exclude these complaints when appropriate. This will include an update to AFCA’s Operational Guidelines and the development of internal resources to support staff to implement the process.

Funding model – recommendations 7 and 8

In early 2021, AFCA appointed PwC to undertake a review of its current funding model and develop a new model that would be fit-for-purpose, sustainable and fair to AFCA members. 

In developing the new model, AFCA and PwC took AFCA member and stakeholder feedback into account and considered the key findings and recommendations of the recently published AFCA Independent Review.

The model was developed with a focus on a ‘user-pays’ approach that reduces the burden on smaller members and those industries that are not heavy users of AFCA. It also minimises cross-subsidisation across sectors and supports firms to better forecast and budget for complaints.

In March 2022, AFCA consulted members, industry bodies and other stakeholders on the new funding model design. To give members and stakeholders multiple opportunities to learn about the model and provide feedback, AFCA adopted a new consultation approach designed to be flexible to member needs, share information in different formats, and provide details on the change impact for specific industries and business sizes.

The consultation included more than 60 meetings with peak bodies and members likely to experience a significant change to costs, five webinars open to all members, and the delivery of 11,000 individual impact assessments tailed to each financial firm.

Following the consultation, AFCA finalised a funding model that is fit-for-purpose, sustainable and fair. The new model includes a single registration fee, a simplified complaints fee structure and five free complaints a year for all members.

Overall, 95% of licensed financial firm members of the AFCA external dispute resolution scheme will pay only their annual registration fee, which has been set at $375.55 for the coming financial year. Among authorised credit representatives, 99.9% will pay only $65.98 annually – which is the same amount as their annual membership levy for the past year.

Under the new model, approximately 90% of AFCA members will see a positive or neutral impact on total fees. The 10% of members that are expected to experience an increase in costs are heavy users of AFCA’s service, and their increased fees will more accurately and fairly reflect their usage.

The model minimises the cross-subsidisation across sectors that was occurring under the interim model, which was put in place at AFCA’s inception in 2018. It considers both the volume of complaints registered for a firm, along with the time taken to resolve them.

The superannuation levy has been abolished and super funds have been brought under the same fee structure as other members. This will have a positive or neutral impact for most super fund trustee members.

We will continue to monitor the performance of the new model over the coming year, including making sure positive, fair, and equitable member and complainant resolution behaviours are occurring.

You can read more about the funding model on our website:

Independent Assessor – recommendation 10

Recommendation 10 states AFCA should increase the visibility of the Independent Assessor function.

To date, AFCA has made improvements to visibility and accessibility of information about AFCA’s Independent Assessor and our service complaints process.

These include:

  • refreshed information on how AFCA handles feedback and complaints about our service, published on our website and the Member Portal
  • new information on the Independent Assessor, with additional information on steps to follow when lodging a complaint, as well as updated frequently asked questions.

In the next quarter, AFCA will publish two new videos about the Independent Assessor and our service complaints and feedback process to ensure this information is available in multiple accessible formats.

You can learn more about the work of the Independent Assessor here.

Systemic issues – recommendations 12 and 13

AFCA plays a critical role in the broader consumer protection framework through the identification, remediation and reporting of systemic issues and possible serious misconduct to regulators at ASIC, the Australian Prudential Regulation Authority (APRA) and the Australian Taxation Office (ATO).

Recommendations 12 and 13 of the Independent Review provided feedback on AFCA’s systemic issues function.

AFCA had already completed its own review of the systemic issues function prior to the Independent Review, and we initiated the Systemic Issues Transformation project to address the different roles AFCA and regulators play. The project also looks at how we can improve transparency through enhanced public reporting. In 2022–23 this will be a key strategic project for AFCA.

Transformation of AFCA’s systemic issues and remediation function will increase our ability to be innovative and effective. This will occur through the proactive use of data-driven analytics to identify and report systemic issues to regulators. We will be able to share insights with industry in real time, providing financial firms with the earliest opportunity to investigate and remediate potential issues affecting consumers and small businesses; thereby, reducing the need for complaints to be lodged with AFCA.

You can learn more about AFCA’s systemic issues work here.

For updates and more information about each of the recommendations, visit

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