Keynote address by Dr June Smith - Deputy Chief Ombudsman

Introduction

Hello, I’m Dr. June Smith and I am the Deputy Chief Ombudsman at AFCA.

With David having shared our vision and priorities for the future, I wanted to reflect on the strong foundations we have laid as an organisation to help make these possible. We are constantly looking at ways to improve outcomes for our members and consumers, and the past year has been no exception.

This has been a time of significant achievement and change at AFCA, with the delivery of major projects, handling of record complaint numbers and a dynamic regulatory and legislative landscape, alongside the emergence of new risks and opportunities for the financial services sector.

Throughout, AFCA has worked to establish itself as a world-class Ombudsman service with a strong record of delivery. These outcomes are best understood in the context of our short six-year history, and how key programs of work have benefited member firms, consumers and, we hope, the lives of everyday Australians.

Independent Review Response Program

As many of you will know, the legislation establishing AFCA in 2018 also required an Independent Review to consider how AFCA was meeting its remit.

The Independent Review was conducted by Treasury in 2021 – and assessed whether we were meeting our statutory objectives to resolve complaints in a fair, efficient, timely and independent manner.

To remind you, in conducting the Review, Treasury received 167 submissions and had a former Federal Court judge evaluate 20 of the 200 AFCA cases raised in submissions.

The Review’s findings, released in 2021, provided a positive report card for AFCA. We welcomed each of the report’s 13 recommendations and committed to addressing these by the close of 2024.

In the three years since those findings were delivered, the world – and how it interacts with financial services – has changed significantly.

What hasn’t changed throughout this period has been AFCA’s commitment to doing what we say we will and delivering strategic, continuous improvements.

The three-year program to implement all 13 recommendations has finished, and a full report by AFCA covering the valuable outcomes of the program will be shared before Christmas. As you know however AFCA has regularly reported on our progress and our outcomes from this work during the last 3 years.

Our efforts in this program have addressed key recommendation themes, in particular delivering a new case management system (CMS) system to increase efficiency of our process, a new framework for delivering Approach documents and a new forward looking review mechanism. We revised our rules and operating guidelines to ensure balance in in the exercise of our discretions and ensuring the safety and wellbeing of our staff and participants. A new funding model has been developed, including 5 free complaints addressing the need for balance and no cross subsidisation.

We improved the transparency of our Independent Assessor role, uplifted and enhanced our systemic issues function including new data analytics to engage in real-time reporting, clarified respective roles with regulators through MOUs and additional reporting, improved processes and guidance for staff on handling further issues in complaints and complaints from wholesale investors.

At every turn, we have focused on making meaningful improvement to the way our service operates for consumers, firms, and stakeholders across Australia.

Looking back over the program, some of the key achievements – with real benefits - include:

Enhanced member engagement

With transparency and responsiveness front of mind, AFCA has expanded our focus on member engagement and consultation. Beyond just updating our funding model, CMS, Approach documents and guidelines, we’ve developed new channels for gathering ongoing feedback from stakeholders through a streamlined consultation process.

This includes more regular forums, roundtables, and direct consultations that go beyond what was recommended in the independent review. We’re ensuring we’re listening to our stakeholders and adapting our processes to meet their needs. You will have seen this in action in the recent approaches we have shared for consultation and the timetable for Approach documents we will develop in 2025.

This robust dialogue – thanks in large part to the organisations represented here today – has meant that we have been able to identify related opportunities and some unintended consequences for all involved.

We’re not just reacting to issues; we’re fostering a culture of consultation and learning, creating a space where members feel they are part of the journey toward better dispute resolution.

Data driven insights

Leveraging data is another area where AFCA has gone beyond expectations. We’re using data analytics to identify emerging trends and possible systemic issues even earlier in our process, enabling us to address them before they escalate and provide real time information to industry about root cause and operational risk that may be impacting complaints.

In 2022, we also launched our Systemic Issues Insights Reports, providing quarterly transparency around industry trends and issues. The reports benefit not only consumers but also should help firms improve their processes, contributing to better overall industry standards.

These insights aren’t just a response to the Independent Review; they’re part of a proactive approach to more strategic, continuous improvement, where we see data as a critical tool for driving fairness and accountability.

Strengthening internal capabilities

We know that success starts at home, so we’ve put significant effort into strengthening our team’s capabilities.

Beyond the training recommended in the Independent Review, we’ve introduced continuous learning programs for our staff to ensure they remain skilled in the latest best practice in complaint handling, including apprehended bias and conciliation.

We’ve also introduced new tools and resources within our internal Knowledge Centre, ensuring that our Caseworkers have access to up-to-date information that supports their decision-making processes, including previous AFCA determinations. This goes well beyond compliance, demonstrating our commitment to excellence in service delivery.

Improved consumer experiences

We have addressed poor conduct by paid advocates affecting the efficiency of the scheme for both financial firms and consumers. AFCA can now also exclude particular paid representatives in certain circumstances as a result of the Rules improvements.

On the consumer side, through our portals, we’ve refined our communications, ensuring that consumers understand and can see every step of the complaints journey. We’ve improved the clarity of our decision-making process and provided more frequent updates to both consumers and financial firms. We know only too well from the many complaints we look at that timely and accurate communication is critical.

We are also proud to have introduced more tailored support for vulnerable consumers. This includes better access to translation and Auslan services, mental health support, and guidance for those unfamiliar with dispute resolution processes. We have ensured all AFCA staff have received cultural awareness training.

Commitment to fairness and accountability

At the core of all these efforts is our unwavering commitment to fairness.

As part of the Independent review response we have:

• enhanced guidance to handle further issues raised once a complaint has commenced
• conducted another independent review of 30 decisions to ensure we are meeting procedural and substantive fairness and impartiality benchmarks; 90% of the decisions that were reviewed were assessed as excellent to good. No decision was rated as poor.

Updated Rules and Operational Guidelines

Another notable achievement in the past year was the publication of our updated Rules and Operational Guidelines, which apply to all complaints lodged from 1 July 2024.

Approved by ASIC, the updated rules and guidelines are designed to enhance transparency, fairness, balance and efficiency in our operations. The improvements include better management of unreasonable conduct; clearer guidance on excluded complaints; and processes to discontinue complaints that are without merit or where a reasonable offer of settlement is made.

These changes reflect our commitment to continuous improvement as a strategic objective for AFCA. It reflects our genuine desire to not just meet but exceed expectations.

Transforming the way AFCA does business

We have heard the feedback about delay in AFCA’s process and the need to streamline and improve efficiency of our service. 

As part of the program of work in response to the Independent Review, we’ve been transforming the way we do business, to meet these goals.

In June, AFCA delivered our IT Transformation program, bringing online three new, integrated systems: a case management system (CMS), an enhanced member portal, and for the first time a consumer portal.

Delivering a significantly improved experience for member firms, consumers and staff, our new systems have replaced legacy platforms and ways of working dating back to AFCA’s establishment.

The benefits of our new technologies are profound, and – in the case of our member and consumer portals – offer world-leading solutions for an Ombudsman service.

For instance, they help reduce the manual work required of your firms through innovations like an improved member portal, targeted automation, while offering complainants and AFCA teams greater visibility and autonomy in their interactions.

It’s been quite a journey to arrive at this point, and we worked closely with members and consumer advocates to understand your needs and to ensure our solutions were both fit-for-purpose and future-proof.

As with any large-scale IT transformation, ours has not been without challenges. We know that many of our members will have had similar experiences when delivering their own platform and system transformations. On behalf of AFCA, we thank you for your support and patience.

As you know, what matters most is how we respond to challenges. We are committed to doing so with transparency and openness, by inviting feedback and taking action.

We’re also conscious of how these challenges may be perceived as impacting AFCA’s complaint handling. So, we have incorporated this into our response to the existing case queue, which includes significant additional resources, a surge workforce and proactive outreach to complainants, among other targeted measures.

Importantly, many members and consumers are already beginning to see the enormous benefits of our new systems, and how they enable more intuitive and efficient ways of interacting with AFCA.

Looking ahead, new self-service tools are being developed for members, enabling you to better track and manage complaints in real-time. This will reduce uncertainty and enhance our commitment to open communication.

With a strong foundation to build on, we’ll continue to make prudent investments – in areas like generative AI and real-time analytics – where these will deliver measurable improvements for your firms, our teams and, of course, consumers.

Progress takes many shapes

AFCA has also been proud to invest our significant expertise in helping to set up Australia’s Compensation Scheme of Last Resort (CSLR), which began work in April 2024.

The CSLR is an important consumer protection framework and supports trust and confidence in the financial services sector.

At the federal government’s request, AFCA assisted with practical steps to get the CSLR organisation up and running. It now stands on its own feet as a separate, independent organisation. AFCA is now focussed on working through those complaints awaiting determination and potential application to the CSLR.

Finally, as we work together to embed continuous improvements across AFCA, we know that transformation and progress will take many shapes.

With this in mind, we are deeply committed to advancing our Reconciliation and advancing the needs and economic empowerment of First Nations peoples.

This commitment is reflected in our Reconciliation Action Plan and in AFCA’s ongoing work to provide culturally respectful and accessible services.

Our goal at AFCA is to ensure that First Nations voices are heard, that our services are culturally appropriate, that First Nations concerns are addressed effectively not only within our own complaint resolution processes but also through the operations of our member firms.

Closing

AFCA’s success is only possible thanks to our teams, who work together, and with our stakeholders, to deliver outcomes that benefit everyone and improve the lives of Australians accessing financial products and services.

We offer our sincere thanks to our member firms, including those of you taking time to participate in today’s forum, for continuing to partner with us to build confidence in Australia’s financial services sector and an efficient, fair, independent and accessible EDR scheme.

As always, I invite you to make the most of these sessions, and to continue engaging with AFCA as we all work towards an Australia free from financial disputes.

Thank you.