Earlier this year, the Australian Government announced the commencement of their scheduled review into the Australian Financial Complaints Authority (“AFCA“) and its operations. The legislation underpinning AFCA required that the Minister conduct an independent review within 18 months of AFCA’s operations beginning, however the review was delayed due to the impact of the coronavirus pandemic.
AFCA is an impartial and independent body that offers dispute resolution services to resolve complaints about financial and credit products and services. AFCA do not act for either party and their decisions are binding on the provider where the complainant accepts the decision.
Due to the impact that AFCA determinations can have on individual consumers and also financial and credit providers, there are many stakeholders keen to provide input into this review, based on their experiences of the AFCA system.
In its first 12 months of operation, between 1 November 2018 and 31 October 2019, AFCA received more than 70,000 complaints, with 44% of all complaints relating to credit products. This represented a 40 percent (40%) increase in total complaints received compared to AFCA’s predecessor schemes, which received a combined total of 52,232 complaints in the 2017/18 financial year.
AFCA’s second year was underpinned by the coronavirus pandemic impacting on the types of complaints received. In the first two years of operation more than $477.4 million in compensation and refunds was awarded or obtained through AFCA’s dispute resolution functions.
AFCA was established on 1 November 2018, replacing three dispute resolution bodies, being the now defunct Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT). This was done as a response to the Review of the Financial System External Dispute Resolution and Complaints Framework released by Treasury in April 2017.
The areas of complaints AFCA consider are:
- credit, finance and loans;
- banking deposits and payments;
- investments and financial advice; and
The review by Treasury is currently underway and is independent of AFCA. Once finalised, the report will be presented to the Minister by 30 June 2021 and tabled in each House of the Parliament within 15 sitting days of being provided to the Minister.