To support efficient and timely handling of financial complaints, between 1 April and 30 June 2021 the Australian Financial Complaints Authority (AFCA) undertook a pilot project to identify complaints without merit earlier.
The three-month pilot tested a new approach to assessing the merit of certain kinds of complaints at the very early stages of external dispute resolution (EDR).
Speaking at the AFCA Member Forums in July, Chief Operating Officer Justin Untersteiner said the pilot was launched in direct response to feedback from AFCA’s members.
“We engage with our members every single day, via industry liaison meetings, with industry associations, forums and of course through our complaint handling processes.
“It is through this engagement that we have identified some areas we can improve – such as how we review complaints that lack merit.
“A number of members told us, particularly those running small and medium size businesses, that at times they are faced with complaints which on the surface appear to lack merit. And in a small percentage of these complaints, the complainant refuses to consider a reasonable resolution and seeks to push the complaint all the way to a Determination.
“The impact of these types of complaints is that the cost of paying for a Determination far outweighs the initial service or product that was offered, putting financial pressure on members.
“We have also been told that this can lead to our members being forced to make a commercial decision which is to concede the complaint, on the basis that it would be too expensive not to,” Mr. Untersteiner said.
To address this, AFCA identified around 120 cases that would be suitable for a merit review pilot project.
The purpose of the pilot was to test a different approach to dealing with complaints, particularly those in AFCA’s Fast Track system, so that AFCA could reduce the time and cost involved in resolving some types of disputes.
“Under the pilot, if the complainant in the case had not appeared to have suffered a loss or the financial firm had not made an error in an initial review of the available information, we wrote to the member and to the consumer to raise our concerns,” Mr. Untersteiner explained.
“After contacting the parties, if it was apparent that the complainant had not suffered a loss or the financial firm had not made an error – we closed the complaint.”
As a result, the time taken to resolve the selected cases in the pilot was halved and in some cases the fee charged for the pilot cases was as much as 75 per cent less than in comparable cases.
“The average fee charged for these cases was $890. To give context, if those same complaints had closed at the Preliminary View or Determination stage, the fee charged would have been between $2100 and $4000,” Mr. Untersteiner said.
AFCA is further analysing the results of the project but strongly believes the pilot clearly demonstrates the new process is faster, cheaper, and fairer to all parties – including complainants and members.
“We are taking the necessary steps to address our member’s feedback. We are confident we will be able to make the new approach a permanent feature of our external dispute resolution system soon.”
You can read Mr. Untersteiner’s full speech from the July 2021 Member Forums here.
