This fact sheet provides information about AFCA’s jurisdiction in relation to complaints lodged against debt management firms (DMFs)

Contents

• What are debt management firms?
• DMFs are required to be AFCA members
• What is AFCA’s role?
• What type of debt management complaints can AFCA consider?
• Are there debt management complaints AFCA cannot consider?
• How does AFCA resolve debt management complaints?

What are debt management firms?

Debt management firms (DMFs) provide consumers with assistance with debt management and credit reporting.

• Debt management
  • applying for a change to a credit contract for which the consumer is a debtor or guarantor
  • applying for a postponement of enforcement proceedings
  • making a complaint or claim to a credit provider, AFCA, ASIC or the Information Commissioner.
• Credit reporting
  • applying for a change to information collected by a credit reporting body about a credit contract for which the consumer is a debtor or guarantor
  • making a complaint or claim to a credit provider, AFCA, Australian Securities and Investments Commission (ASIC) or the Information Commissioner.

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DMFs are required to be AFCA members

From 1 July 2021, anyone providing certain debt management services must have a credit licence and be a member of AFCA under the National Consumer Credit Protection Amendment (Debt Management Services) Regulations 2021. DMFs are regulated by ASIC.

AFCA membership applications can be completed online

Further information about debt management services is contained in ASIC’s information sheet, Debt management services: Applying for a credit licence or variation

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What is AFCA’s role?

AFCA helps individuals, small businesses and their financial firms to resolve complaints about financial products and services.

We are impartial and independent. We do not act for either party to advocate their position. If a complaint is not resolved between the parties, we can decide an appropriate outcome.

Decisions we make can be binding on the financial firm involved in a complaint. We can award compensation for losses suffered because of a financial firm’s error or inappropriate conduct. We do not, however, award compensation to punish financial firms or impose fines.

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What type of debt management complaints can AFCA consider?

AFCA can consider certain complaints lodged by an individual against a DMF who is an AFCA member.

AFCA can consider debt management complaints about the following services:

• debt negotiation and financial difficulty
• credit counselling (including budgeting support)
• lending and refinancing 
• credit reporting and credit repair
• brokering
• debt consolidation
• some consumer advocacy.

AFCA can consider debt management complaints that raise the following issues:

• misleading and deceptive conduct
• unconscionable conduct
• non-disclosure
• credit reporting
• financial difficulty
• service quality.

We can also consider any other issues raised by complainants that otherwise fall within our jurisdiction.

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Are there debt management complaints AFCA cannot consider?

AFCA will always consider a complaint unless there are strong compelling reasons not to do so.

AFCA may not be able to consider a complaint if it has been lodged outside our time limits or is excluded for one of the mandatory exclusion reasons in the AFCA Rules.

AFCA also has discretion to exclude complaints that have already been dealt with by a court.

For more information, read our Rules and Operational Guidelines

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How does AFCA resolve debt management complaints?

AFCA uses a range of methods to resolve a complaint. We will select the method, or a combination of methods, that we think is most likely to resolve the complaint fairly and efficiently.

Some of the complaint resolution methods we may use are:

• negotiation
• telephone conciliation conference
• preliminary assessment
• determination.

For more information, read about AFCA’s complaint resolution process

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