This page includes previous updates about AFCA's response to the independent review.
The latest update can be found on the independent review homepage.
September 2023
In the two years since commencing its response to the Independent Review, AFCA has made significant progress in implementing a range of important initiatives, completing work in responding to four recommendations and making strong progress across another eight recommendations. We remain on track to meet our commitment to complete work in responding to all recommendations by December 2024.
AFCA’s Rules and Operational Guideline (OG) Change Consultation
AFCA consulted on proposed changes to its Rules and Operational Guidelines (OGs) from Monday 27 March to Monday 22 May, 2023. The proposed changes were developed to address several recommendations made in Independent Review, with some additional changes to help ensure our Rules and OGs remain accurate, up-to-date and provide clearer guidance about AFCA’s jurisdiction and processes.
All of the proposed amendments respond to feedback from our stakeholders, including government, AFCA members, community stakeholders and AFCA colleagues.
Since the completion of AFCA’s Rules and OG Change Consultation, AFCA has reviewed all stakeholder feedback and, where appropriate, incorporated it into the proposed changes to the Rules and OGs.
AFCA was pleased to receive a total of 37 formal written submissions during consultation. We thank our stakeholders for their submissions and engagement throughout the consultation process.
The proposed Rules changes have now been submitted to the Australian Securities and Investments Commission (ASIC) for approval. A Consultation Response Paper will be published, detailing the overall response to the consultation and the final changes to the Rules and OGs, once the process is finalised. AFCA looks forward to updating its stakeholders as this work progresses.
AFCA Discretion Framework
Following stakeholder feedback about the proposed Rules and OG changes, we have also commenced development of an AFCA Discretion Framework. This will assist our stakeholders to understand how and when AFCA exercises discretion within our Rules and will support greater consistency and fairness in our decision making.
Comprehensive review of AFCA’s funding model (Recommendations 7 and 8)
AFCA’s new funding model has now been in place for more than a year. A review of the model has been completed, indicating it is operating as intended and has achieved its objectives of being fit-for-purpose, sustainable and fair.
Actual fees and the distribution to members closely aligned to the modelling completed as part of the design of the new model during the 2022 financial year. The ‘user-pays’ feature is functioning as expected with the heaviest users of AFCA’s service paying their fair share.
AFCA saw a significant increase in complaint volumes during the year. The review found the proportion of complaints closed at each stage have remained relatively stable year on year, indicating the model has not driven a change in behaviour from members or consumers because of published and reduced fees. For more information visit the AFCA funding model page.
Forward-Looking Review Mechanism update (Recommendation 9)
AFCA has now consulted on the changes required to AFCA’s Operational Guidelines to implement Recommendation 9, by enhancing the visibility, accessibility and independence of the forward-looking review mechanism The proposed changes to the Operational Guidelines will take effect from 1 July 2024, following ASIC approval.
The governance model for AFCA’s Forward-Looking Review Mechanism (FLRM) is currently being finalised with Deloitte. We plan to update external stakeholders about the proposed FLRM model at our external stakeholder forums in November 2023.
Approach Consultation update (Recommendation 11)
In responding to Recommendation 11, consulting on AFCA approaches prior to finalisation to identify unintended consequences, we have piloted different consultation methods with the development of new AFCA approaches (e.g. Responsible Lending and Inappropriate Lending to Small Business).
This experience has assisted in shaping a governance model for the development of AFCA Approach documents with Deloitte, which we are currently finalising. The proposed governance model covers the complete life cycle of an Approach document including how AFCA will consult with external stakeholders. Once finalised, we will update all stakeholders on the governance model. This will include an update about the process for Approach document development at our external stakeholder forums in November 2023.
AFCA’s new approaches consultation closes
In response to Recommendation 11, we have piloted consultation methods with the development of new AFCA approaches, most recently completing consultation on our draft Responsible Lending Approach and Inappropriate Lending to Small Business Approach. Consultation on AFCA’s draft Responsible Lending Approach closed on 11 September and consultation on the Appropriate Lending to Small Business Approach closed on 29 September.
AFCA is committed to ensuring we consult in a range of accessible, transparent and inclusive formats, to enable stakeholders to engage in a way that suits them. This consultation included six separate roundtable discussions with industry and consumer groups, and a public webinar, which received over 300 registrations. We received a total of 25 formal written submissions on the draft Responsible Lending Approach and 17 submissions on the draft Appropriate Lending to Small Business Approach, from a range of industry members, consumer groups and peak bodies. We thank our stakeholders for their participation and for providing us with thorough and insightful feedback and submissions.
AFCA is currently considering and responding to submissions and will publish all non-confidential submissions in coming months. We aim to publish both updated final approaches in late 2023 to early 2024.
For any questions or more information, visit the new approaches consultation page.
NEW: latest edition of the Systemic Issues Insights Report (Recommendation 13)
As part of our continued response to Recommendation 13, improving transparency of systemic issues in public reporting, AFCA has launched the latest edition of the AFCA FY22-23 Systemic Issues Insights Report. The information and data included in these quarterly reports is groundbreaking. It provides a range of insights to policy makers, industry and the public that goes to the heart of AFCA’s goal to improve industry practices through the public provision of its data and evidence.
In the reported period, AFCA identified and investigated systemic issues resulting in more than $61 million in remediation being returned to 145,480 consumers. This compares with $38 million returned to 186,924 in the previous report covering July to December 2022.
The report shares data and findings from a range of recent systemic issues cases across the industry, including misreported credit information and poor debt collection practices, inconsistent settling of motor vehicle insurance claims, and inadequate disclosure of increases to life insurance premiums.
Visit www.afca.org.au/about-afca/systemic-issues for more or reach out to the Systemic Issues team at systemicissues@afca.org.au with any questions.
Progress across a range of other Recommendations
AFCA has made significant progress across several recommendations, including:
- Establishing a project team to develop clearer guidance to support consistent treatment of further issues and inform key stakeholders (Recommendation 1).
- Completing a post implementation review of our Fairness Jurisdiction project (Recommendation 2) and commenced an independent review of a sample of AFCA determinations, reviewing for matters related to fairness and impartiality (Recommendation 3).
- Developing guidance for fee paid representatives about how to engage with our service (Recommendation 4) and progressing a change to AFCA’s Rules, to further clarify how AFCA will manage fee paid representatives.
- A range of work is underway to specifically address timeliness (Recommendation 5), including a continuous improvement program focused on operational efficiency and effectiveness and the implementation of a new complaint management system, including a consumer and member portal. We will continue to report annually on complaints, including on the timeliness of complaints handling. This year, we have published additional data and financial information in our Annual Review to increase transparency of our work and are looking at other ways we can regularly share data with our stakeholders.
- Continuing to improve the visibility of the Independent Assessor to all parties to a complaint (Recommendation 10).
- The transformation of AFCA’s systemic issues function, with more work in progress.
- Continuing to engage with all stakeholders on AFCA’s role identifying, investigating and reporting systemic issues and the different role that AFCA and regulators play (Recommendation 12).
June 2023
AFCA has continued work in response to the Independent Review making progress across 12 recommendations, with work complete on four of these.
AFCA’s Rules and Operational Guidelines consultation concludes
In May, AFCA concluded its consultation on proposed changes to AFCA’s Rules and Operational Guidelines. The proposed changes have been developed to address recommendations made in the Independent Review, with some additional changes to help ensure our Rules and Operational Guidelines remain accurate, up-to-date and provide clearer guidance about AFCA’s jurisdiction and processes.
The consultation period involved engagement with various stakeholders, including financial firms, industry associations, peak bodies, paid representatives and consumer representatives, to gain feedback on the proposed changes (outlined in the Consultation Paper). AFCA also met with and provided regular updates to regulators and Treasury.
To date, AFCA has received 37 formal submissions, including four confidential submissions. AFCA will now review the feedback and submissions over coming months. The final outcomes of the Consultation will be shared in September.
Following approvals, the proposed new Rules and Operational Guidelines will commence on 1 July 2024.
NEW: Edition two of the Systemic Issues Insights Report
As part of our continued response to Recommendation 13, improving transparency of systemic issues in public reporting, we launched the second edition of the AFCA FY22-23 Systemic Issues Insights Report in May 2023. The report delivers on our commitment to transparency and sharing key systemic issues insights with consumers, members and stakeholders. The report shares recent data and findings from a range of systemic issues cases across the industry, helping financial firms improve industry practice.
Visit www.afca.org.au/about-afca/systemic-issues for more or reach out to the Systemic Issues team at systemicissues@afca.org.au with any questions.
Improving transparency of timeliness with AFCA’s IT transformation
AFCA is currently undertaking an IT transformation project to ensure it provides a modern, efficient and user-friendly experience for all. The transformation includes new technology, streamlined processes and integrated systems, all designed to support fair, effective, and timely dispute resolution. The implementation of these new systems is a key part of AFCA’s response to Recommendation 5, improving transparency of timeliness and better managing timeliness expectations.
In FY24, three key products will launch: a new and enhanced member portal for financial firms, a new consumer portal for complainants and their representatives and a new case management system for AFCA’s people. Not only will these systems talk to each other to significantly improve efficiency, they will also improve communication and transparent information sharing among parties to support fair and timely dispute resolution.
Forward-Looking Review Mechanism update (Recommendation 9)
Changes required to AFCA’s Operational Guidelines for Recommendation 9, enhancing visibility, accessibility and independence of the forward-looking review mechanism, have been consulted on through AFCA’s Rules Consultation.
AFCA has competed research on models for forward-looking review mechanisms and is considering recommendations. When developed, we will invite feedback on the mechanism.
Approach Consultation update (Recommendation 11)
For Recommendation 11, consulting on AFCA Approaches prior to finalisation to identify unintended consequences, AFCA has completed research on consultation models and is considering recommendations. We are piloting consultation methods with the development of new AFCA approaches (e.g. Responsible Lending and Inappropriate Lending to Small Business).
March 2023
AFCA has continued work in response to the Independent Review making progress across 12 recommendations, with work complete on four of these.
Consultation on AFCA’s Rules and Operational Guidelines
AFCA is consulting on proposed changes to its Rules and Operational Guidelines, from 27 March to 22 May 2023.
The proposed changes have been developed to address recommendations made in the Independent Review, with some additional changes to help ensure our Rules and Operational Guidelines remain accurate, up-to-date and provide clearer guidance about AFCA’s jurisdiction and processes. Due to dependencies on these changes, we have also revised completion dates for recommendations 4, 6 and 9 to 2024.
AFCA welcomes feedback and invites all stakeholders to make a submission to its Rules and Operational Guidelines consultation. Please note submissions or feedback should be provided by Monday 22 May 2023.
You can find further details about the consultation, including the consultation paper and details on how to provide a submission, on the Rules and OGs Consultation website.
December 2022 Update
AFCA has continued work in response to the Independent Review making progress across 12 recommendations, with work complete on 4 of these. Notable updates include increasing the visibility of AFCA’s Independent Assessor and enhancing transparency of systemic issues.
Improving visibility of the Independent Assessor
Our work improving the visibility of the Independent Assessor, recommendation 10, has now come to a close, with the delivery of enhanced public resources, member resources, internal training and presentations to consumer organisations. While this project work has completed, AFCA will maintain an ongoing focus on raising the visibility of AFCA’s service and feedback measures, including the Independent Assessor, to ensure we continue to provide an accountable service.
Improving the transparency of systemic issues
In 2022 we completed our work to become more transparent in our public reporting of systemic issues with the launch and publication of AFCA’s Systemic Issues insights report and case studies. The insights report shares key information such as industry themes and issues, and the nature and impact of complaints. We will continue to share key insights on systemic issues and report on these regularly to key stakeholders, with increasing visibility of systemic issues an ongoing focus.
Reviewing AFCA’s Rules and Operational Guidelines
To help us deliver on our Independent Review commitments, we have commenced work reviewing our Rules and Operational Guidelines, as a core component of several recommendations.
Following scoping and early consultation, we know the work required to change our Rules and Operational Guidelines will be more extensive than initially proposed. For example, recommendation 6 about complaints from sophisticated and professional investors has now been revised for completion in 2023. We look forward to consultation and keeping stakeholders informed as we progress this important work.
October 2022 Update
AFCA has continued work in response to many of the review’s recommendations and has made progress across 12 recommendations, with notable updates including new processes and resources for paid advocates, enhanced transparency in the recent AFCA 2021–2022 Annual Review and reviewing AFCA’s Rules.
Required information process and guidance for paid advocates
AFCA has improved its process to ensure paid advocates provide the required information when making complaints on behalf of consumers.
From Monday 5 September 2022, all paid representatives must provide additional information when lodging a complaint. If the information is not provided, or a representative’s conduct does not meet AFCA’s expectations, AFCA can refuse to consider the complaint under AFCA Rule C.2.2(g).
To support paid representatives with this change, AFCA has published new information online about the information required for different types of complaints, and the expectations under the AFCA Engagement Charter.
This new process will improve efficiency and address the poor conduct of some paid advocates (recommendation 4). Over the next year, AFCA will address this recommendation further, through changes to its Rules and Operational Guidelines and establishing a new approach with input from key stakeholders.
Improving transparency of timeliness and funding
On Monday 17 October 2022, AFCA published its 2021–22 Annual Review, which included enhanced reporting on timeliness and AFCA’s funding.
The open cases section improved transparency of timeliness (recommendation 5) by providing information on the number of open cases, their age, and their stage in AFCA’s process. For the first time, data from the previous three years was included to enable comparison of performance year on year.
We have done this to increase transparency about complaint trends, with the ultimate goal of improving practices and minimising complaints. We have also included more information about where complaints resolve in our process and in who’s favour.
The AFCA General Purpose Financial Report 2021-22 section addresses recommendation 8 by providing transparency about AFCA fees and the services and activities it funds. We also included a new and easy-to-read high-level breakdown of how AFCA used its funds in 2021–22. Following the successful launch of AFCA’s new funding model in July 2022, this reporting is the final deliverable of recommendations 7 and 8 and completes these programs.
AFCA would again like to thank members and stakeholders for their engagement with the consultation and the implementation of the new funding model.
AFCA will continue to provide members with updates about the ongoing performance of the model over time.
For more information, read the AFCA 2021–22 Annual Review.
Reviewing AFCA’s Rules and Operational Guidelines
To help us deliver on our Independent Review recommendations, we have commenced work reviewing our Rules and Operational Guidelines (OG). Ensuring our Rules are clear and effective is also part of our existing and ongoing commitment to continuous improvement. We look forward to consulting with all stakeholders and keeping stakeholders informed as we progress with this important work.
July 2022 Update
Since March, AFCA has continued work in response to many of the review’s recommendations, with a focus on implementing the new AFCA funding model, timeliness reporting, and increasing visibility of AFCA’s Independent Assessor.
Funding model
AFCA’s new funding model launched on 1 July 2022. The model’s ‘user pays’ principle will ensure heavy users of AFCA’s services pay their fair share, while firms and industries which receive few or no complaints pay less.
Many of the model’s features — including a simplified fee structure, the introduction of five free complaints, and reduced complaint fees—directly align with Independent Review recommendations 7 and 8 by ensuring the funding model design does not disincentivise firms from defending complaints, and by making AFCA’s fees and charges more transparent and easier to understand.
AFCA would like to thank all those who took part in the consultation. The number of webinar attendees, views of the consultation resources, questions and submissions was the highest AFCA has ever received during a consultation.
Feedback from stakeholders helped us improve the model even further by introducing small changes, such as progressive invoicing for members with higher annual user charges, and not charging a rules fee for complaints found to be outside AFCA’s jurisdiction.
AFCA members will receive complaint invoices under the new model in August.
For more information, please visit the funding model consultation report and new funding model page.
Improving transparency and reporting of timeliness
AFCA has recently published our FY22 Data snapshot, which includes timeliness data. Over the past year, the average time to resolve a dispute decreased from 76 days (FY21) to 72 days (FY22). There has also been significant progress on closing complaints older than 12 months, reducing these cases from 4% of all complaints at AFCA to just 2.4%.
This data indicates that AFCA’s recent work is having an impact and that members are continuing their efforts to resolve complaints in a timely manner.
Later this year, to further address recommendation 5, the AFCA Annual Review 2022 will include more timeliness reporting, including:
- new timeliness measure to better represent where complaints resolve during AFCA’s process
- information about AFCA’s internal working group addressing complaints that remain unresolved beyond 12 months, and our continuous improvement program focused on operational efficiency
- an update on the development of AFCA’s new case management system and Member Portal, which will improve efficiency and provide more insights about complaints and timeliness.
Improving visibility of the Independent Assessor
To address recommendation 10, AFCA has published new easier-to-access information about the service complaints process. This includes:
- Simplified resources on how AFCA handles feedback and complaints about our service
- New information on the Independent Assessor including the steps to follow when lodging a complaint with the Independent Assessor and updated frequently asked questions
- AFCA is also developing short videos about the Independent Assessor and our service complaints and feedback process to ensure this information is available in multiple accessible formats.
March 2022 Update
Work is underway to respond to the review's recommendations across the whole of AFCA. This includes using the review to inform and focus the aims of our existing projects such as the AFCA funding model, IT transformation and fairness jurisdiction project.
Funding model
AFCA is currently consulting on a new funding model to be introduced on 1 July 2022.
The AFCA Independent Review, member feedback, and the Ramsay Review of the Financial System EDR and Complaints Framework, have all influenced the model’s development.
The proposed model is designed to be efficient, sustainable, responsive and support early resolution of complaints.
The new model addresses recommendation 7 and 8 of the AFCA Independent Review by ensuring firms are not disincentivised from defending complaints and making AFCA's fees more transparent and easy to understand.
For more information visit the AFCA funding model consultation page.
IT transformation
Since the Independent Review report was published, AFCA has launched a new benchmarking dashboard for members to access real-time data about their complaint performance and compare it with the performance of similar financial firms.
This is just the first in a series of system launches and upgrades to benefit members, complainants and AFCA staff. Future launches include a redesigned member portal, new consumer portal, and upgraded complaint management system.
The IT transformation supports recommendations related to timeliness, efficiency, and transparency by allowing AFCA to use data, analytics, and automation to improve processes and provide insights on complaints and how they progress though AFCA’s process.
AFCA fairness jurisdiction project
AFCA has completed another significant component of the fairness jurisdiction project. The new AFCA fairness storybook summarises AFCA fairness jurisdiction and provides information on how AFCA ensures it is applied consistently and in a way that is fair for members and complainants.
