Updated: 4 January 2024

David Locke, Chief Ombudsman and Chief Executive Officer of AFCA, reflects on its first five years and the path ahead ...


The final report of the Hayne Royal Commission was yet to land when the Australian Financial Complaints Authority (AFCA) opened its doors five years ago.

The Ramsay Review had concluded the previous year that a new, single external dispute resolution (EDR) body was needed to replace the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT) – a view with which the Hayne report was soon to agree. 

The predecessor bodies had done good work, the Ramsay panel said, but having multiple dispute resolution bodies meant “an increased risk of consumer confusion”. For firms, among other things, multiple schemes meant duplication of costs.

Five years on, our reshaped ombudsman service has helped hundreds of thousands of consumers and thousands of financial firms resolve disputes, after we received more than 400,000 complaints over that time. 

Firms have agreed to – or, in a small proportion of cases, been ordered to – pay amounts totalling $1.2 billion, as well as taking other steps to make things right when necessary.

Our work in systemic issues – we also monitor individual complaints to identify wider issues – has resulted in about $380 million being paid to 4.9 million people.

The AFCA service, which is free for consumers and small business complainants and funded on a user-pays basis by firms, is less costly and more efficient process than going to court, for firms as well as consumers. Over the past five years, AFCA closed 60 per cent of complaints within 60 days. 

In the past financial year, across all complaints, the average time to closure was 69 days. This compares with an average of 796 days for the SCT, 107 days for the CIO, and 62 days for FOS, as reported to the Ramsay Review. 

The challenge is that more recently the volume of complaints escalated to AFCA has been increasing at an unsustainable rate. In their final full year, the predecessor dispute resolution bodies received 52,000 complaints in total. Last financial year AFCA received a record 97,000 complaints.

What does that say about the state of the financial services sector today, just months away from another fifth anniversary – that of the Hayne Report Royal Commission?

We have seen complaints to AFCA about financial advisers fall in the wake of Hayne. Banks did a good job during the pandemic working with people experiencing financial hardship, and we hope they do the same as interest rate rises work their way through. But scams are a rising source of complaints, as a serious crime that is testing boundaries.

Insurers are now starting to acknowledge they could have done better during significant natural disasters last year, when claim delays generated high numbers of complaints to AFCA. With climate change making such events more likely, it’s important that insurers can promptly help people whose lives have been devastated. 

As an ombudsman service, we believe all firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA – which is the role we are meant to play. Instead, the volume of complaints reaching us is putting unnecessary pressure on the EDR system and inevitably causing further delays for complainants. We need to see the sector as a whole lift investment in internal complaints handling and expertise.

We are also concerned about signs of a softening attitude to industry codes of practice, which we refer to when we consider the merits of a complaint against a firm. We have raised concerns with some industry bodies about proposed changes because we believe we have an important perspective to share on how codes apply in practice. 

Well-functioning dispute resolution – internally and through the external dispute resolution system – allows consumers to have confidence and trust in the financial system, because they know they can seek redress if things go wrong. 

I congratulate the 70 per cent of financial firm members who did not have a complaint reach AFCA in the past five years, and I thank those firms that are taking steps to improve their internal and external complaints performance.

Finally, our most experienced people have been in the ombudsmen sector long enough to know that the pendulum of consumer protection regularly swings one way then the other. The Ramsay and Hayne reports both highlighted the room for improvement. Five years on, our work as an ombudsman service shows that the need for a strong consumer protection framework remains. 

As we mark these anniversaries, and reflect on the past year, it’s time to recommit to appropriate regulation and meaningful codes of practice, supported by effective dispute resolution, for the benefit of both business and consumers.

David Locke
Chief Ombudsman and Chief Executive Officer, AFCA

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