Last updated: July 2023
Fairness
"The fairness jurisdiction is what differentiates AFCA from courts and tribunals. It enables AFCA to make decisions outside of a strict legalistic approach and facilitates a more expedient decision-making process.”
- Independent review report, page 39
1. Dealing with further issues raised during the complaint process
Status: On track for completion 2024
Report recommendation
AFCA should provide clearer guidance on the circumstances under which a further issue identified during the complaint process would revert to financial firms for consideration through internal dispute resolution.
Where the issue is combined with an existing complaint, both parties should be provided with procedural fairness by having the opportunity to comment on changes to the scope of the complaint.
However, in instances where AFCA finds parties inappropriately seeking to add new issues, it should take action to dismiss or curtail such behaviour.
Scope
- Requires preparation of additional guidance to ensure consistency and assist AFCA staff and stakeholders
- Requires change to systems or processes
- Requires input from stakeholders
Next steps
- Develop clearer guidance to support consistent treatment of further issues and inform key stakeholders.
- The establishment of a Project Team to deliver stakeholder engagement, process changes and implementation is underway. The team includes representatives from across AFCA and is scheduled to begin meeting from the planned project commencement date.
- Recruitment for a Project Manager to lead the initiative.
2. Ensuring all AFCA decisions consider what is fair in all circumstances
Status: Revised for completion in 2024
Report recommendation
In making its decisions, AFCA should consider what is 'fair in all the circumstances' having primary regard to the four factors identified in its Rules - legal principles, industry codes, good industry practice and previous decisions.
Scope
- Requires change to systems or processes
Completed work
The AFCA Fairness Jurisdiction Project has completed its examination of how AFCA applies its jurisdiction throughout our dispute resolution processes. The project has since delivered resources to AFCA staff, members, complainants and stakeholders to ensure our fairness jurisdiction is clearly communicated to all parties throughout our process. These include:
- New Fairness navigation tool which ensures AFCA decision makers are consistent when applying AFCA's fairness jurisdiction to complaints
- New decision templates highlighting AFCA’s approach to fairness when making decisions
- Apprehended Bias Policy, which sets out how AFCA’s people remain impartial when working to resolve complaints
- AFCA’s Engagement Charter, which sets clear expectations for how parties should engage with each other and AFCA to ensure a fair process
- AFCA’s Fairness Jurisdiction Project outcomes report, which provides information on how AFCA ensures these principles are applied consistently and in a way that is fair for members and complainants, and
- Republishing AFCA Approaches to better reflect fairness jurisdiction (completed in May 2022).
Next steps
- An ongoing focus to ensure the outcomes of the Fairness Jurisdiction Project are embedded within AFCA and understood by our members, complainants and stakeholders.
- Following the completion of a post implementation review (PIR) and report of the Fairness Jurisdiction Project, an independent sample review of AFCA determinations will inform next steps and help ensure the outcomes of the project are fully embedded.
Independence
“The independent expert assessed every case example for conformity to the requirements of independence and impartiality. The expert did not come across any material that would suggest that AFCA failed to demonstrate independence and impartiality in its handling of any of the complaints in the sample.”
- Independent review report, page 44
3. Not advocating or acting in a manner that compromises impartiality
Status: On track for completion 2024
Report recommendation
AFCA should not advocate for, nor act in a manner that otherwise advantages, one party such that the impartiality of the complaints resolution process is compromised.
Scope
- Changes to AFCA Rules or Operational Guidelines (if required)
- Establish new AFCA Approach (if required)
- Requires change to systems or processes
- Requires input from stakeholders
Completed work
- An internal working group is focused on embedding practices that promote impartiality during the complaint process.
- Resources delivered by the AFCA Fairness Jurisdiction Project include the Apprehended Bias Policy, which sets out how AFCA’s people remain impartial when working to resolve complaints.
- AFCA has established a training program on trauma informed and culturally appropriate dispute resolution practices for our teams.
Next steps
- The independent sample review of AFCA determinations underway for Recommendation 2 will also assess whether AFCA is engaging in procedural fairness.
Efficiency and Timeliness
“The overall average time it takes to resolve a dispute was 74 days in its first two years of operation. These statistics compare favourably to AFCA’s equivalent in the United Kingdom"- Independent review report, page 50
4. Addressing poor conduct by some paid advocates
Status: On track for completion in 2024
Report recommendation
AFCA should address poor conduct by paid advocates affecting the efficiency of the scheme, such as by amending its Rules to allow it to exclude certain paid advocates from involvement in the complaints process. The Government could also consider an amendment to AFCA’s authorisation conditions to support such changes.
Scope
- Establish new AFCA Approach
- Requires change to AFCA Rules or Operational Guidelines
- Requires change to systems or processes
Completed work
- Updated process and online resources to ensure paid advocates provide the required information and understand our expectations when making complaints on behalf of consumers.
- Internal working group created, focused on updating AFCA Rules and Operational Guidelines, and developing a new AFCA Approach with input from key stakeholders.
- Consultation on updates to AFCA’s Rules and Operational Guidelines and supporting information with key stakeholders.
Next steps
- Review and collate feedback from stakeholders received during the consultation period.
5. Improving transparency of timeliness and better managing timeliness expectations
Status: On track for completion 2024
Report recommendation
AFCA should:
- continue to publish data on its timeliness and start publishing data on the full range of complaints it resolves, including those that extend beyond 12 months
- better manage expectations around timeframes in its communication with parties to a complaint
- focus on improving the timeliness of complaints that remain unresolved beyond 12 months.
Scope
- Requires change to systems or processes
Completed work
- Continued focus on improving timeliness of unresolved complaints, including closure of complaints extending beyond 12 months
- Review of available timeliness information for complaints to enable assessment of data solutions that will improve transparency.
- AFCA has implemented strong governance and oversight to reduce the volume of aged complaints (complaints or cases greater than 365 days from lodgement). This has seen the establishment of:
- Regular ‘aged case clinics’ which involves collaboration between key AFCA areas to troubleshoot complex aged complaints, and develop options to progress and resolve.
- Regular reporting and performance tracking on aged complaints.
- An aged complaints reporting predictor which supports proactive monitoring and aids in the early intervention of complaints at risk of becoming aged.
- A Lead Ombudsman leading the work on aged complaints.
These measures have delivered a significant reduction in aged complaints. As of 1 June 2023, open aged complaints accounted for 0.9%, down from a high of 4.7% on 1 September 2021.
Existing work underway
- Development of a new case management system.
Next steps
- Continue review of available timeliness information with the aim to improve transparency and set better expectations with parties to a complaint.
- Update systems to improve timeliness information and establish service standards for complaint handling.
Jurisdiction
"The Review does not consider it appropriate that AFCA be required to exclude all wholesale investors. Where possible, AFCA should look to more actively exercise its existing discretion to exclude wholesale complaints in appropriate circumstances."- Independent review report, page 60
6. Complaints from sophisticated or professional investors
Status: On track for completion in 2024
Report recommendation
AFCA should exclude complaints from sophisticated or professional investors, unless there is evidence that they have been incorrectly or inappropriately classified.
Scope
- Requires change to AFCA Operational Guidelines
- Requires change to systems or processes
- Requires input from stakeholders
Completed work
- An internal working group, focused on addressing how AFCA responds to complaints from sophisticated and professional investors, has reviewed our approach and drafted a proposed change to the AFCA Operational Guidelines.
- Consultation on updates to AFCA’s Operational Guidelines and supporting information with key stakeholders.
Next steps
- Review and collate feedback from stakeholders received during the consultation period.
Funding
“Even for those financial firms that are subject to AFCA’s complaint fees and the user-charge, it is likely that AFCA’s dispute resolution service offers a more efficient and cost-effective outcome than the alternative if those complaints went through a court or tribunal process.”- Independent review report, page 65
7. Ensuring funding model design does not disincentivise firms from defending complaints
Status: Completed in 2022
Report recommendation
AFCA’s funding model should not disincentivise financial firms from defending complaints they consider do not have merit and should better take into account the circumstances of small financial firms.
Scope
- Requires change to systems or processes
- Requires input from stakeholders
Completed work
- On 1 July 2022, AFCA implemented its new funding model. The new model addresses recommendation 7 through several features which aim to remove any inadvertent disincentives to proceed through our dispute resolution process, and to remove financial pressure from small financial firms. These features include:
- Five free complaints each financial year
- A single annual flat registration fee of $375.55 for financial firm members, and $65.98 for Authorised Credit Representatives, and
- A simplified complaint fee structure that reduces complexity and reduces complaints fees.
- Members have been issued their first invoices under the new fee structure, and over the model’s first year, AFCA will monitor its performance and share any findings with members. For more information visit the AFCA funding model page.
- AFCA continues to review its processes to support members and consumers to resolve complaints as early as possible in a fair and transparent way.
8. Improving transparency of AFCA fees and the services and activities they fund
Status: Completed in 2022
Report recommendation
AFCA should improve the transparency of its fees for financial firms and how the fees are being used to support AFCA’s activities.
Completed work
- Simplified fee structure in the new AFCA funding model allows members to more easily understand the fees incurred by complaints at different stages of our process. For more information visit the AFCA funding model page.
- New financial information published in the AFCA 2021–2022 Annual Review illustrates how funds are spent to support the delivery of AFCA's service.
Transparency and Accountability
"All models considered by the Review to add further review mechanisms would necessarily add costs and adversely affect timeliness of decisions, impacting accessibility and efficiency...It would also risk AFCA's processes becoming more legalistic."
- Independent review report, page 70
9. Enhancing visibility, accessibility and independence of the forward-looking review mechanism
Status: On track for completion in 2024
Report recommendation
AFCA determinations should continue to not be subject to merits review, but the substance of a determination should be reviewable with respect to its application to future cases. To this end, AFCA should enhance the visibility, accessibility and independence of its existing forward-looking review mechanism.
AFCA should amend its Operational Guidelines to remove the requirement for an applicant to demonstrate an error of law to access the formal forward-looking review mechanism. Applicants should be able to access it if they are able to demonstrate that the AFCA determination adopts an approach that could have a significant impact across a class of consumers, businesses or transactions.
Scope
- Requires change to AFCA Rules or Operational Guidelines
- Requires change to systems or processes
- Requires input from stakeholders
Next steps
- Exploring new models for forward-looking review mechanisms and reviewing consultation methods for their development
- Consultation on proposed changes to AFCA’s Operational Guidelines with key stakeholders
- Review and collate feedback from stakeholders received during the consultation period.
10. Improving visibility of the Independent Assessor to all parties to a complaint
Status: Completed in 2022
Report recommendation
Complaints about AFCA’s service should remain the responsibility of the Independent Assessor. AFCA should improve the Independent Assessor’s visibility as part of its communications with parties to a complaint.
Scope
- Requires change to systems or processes
Completed work
- Updated communications to both consumers and members about how to provide feedback and the Independent Assessor function.
- Enhancements to public resources include:
- Updated information about the service complaints process and the Independent Assessor have been published on the AFCA website, including new videos for members, consumers and stakeholders.
- Information about AFCA’s service complaints process and the Independent Assessor is now available in 19 languages to improve accessibility on the AFCA website.
- Improved AFCA website navigation and enhance webpages accessibility through search engine optimisation to make it easier to find information about the Independent Assessor.
- Improved the Independent Assessor’s report in the Annual Review and developed a new factsheet.
- Enhancements to member specific channels include new resources and links on the member portal, communications to members and the member satisfaction survey.
- Enhancements to uplift internal visibility include review of resources, updated staff training modules and completing several staff presentations. We also developed new workforce planning tools to ensure AFCA is appropriately resourced to meet and maintain service levels for service complaints.
The Independent Assessor presented to consumer representative organisations and will be presenting at future stakeholder forums.
11. Consulting on AFCA Approaches prior to finalisation to identify unintended consequences
Status: On track for completion 2023
Report recommendation
AFCA should ensure consultation is undertaken on each Approach Document prior to final publication.
Scope
- Requires change to systems or processes
Completed work
- Researched options for improving future consultations with input from key stakeholders.
Next steps:
- We are piloting a new consultation process on new Approaches (e.g. Responsible Lending and Inappropriate Lending to Small Business)
- Once the pilot is complete, we will finalise a formal consultation process to identify any unintended consequences of new AFCA Approaches (and inform key stakeholders).
Other
“It is important that there is a clear and transparent separation between the role of AFCA and the role of regulators.”- Independent review report, page 86
12. Systemic issues that have been referred to ASIC or another regulator
Status: On track for completion in 2023
Report recommendation
Where a systemic issue has been referred to ASIC or another regulator, AFCA should cease its investigation of the systemic issue. ASIC and other regulators should advise AFCA of the outcomes of the referrals they receive. However, AFCA should continue to resolve any relevant individual complaints.
Scope
- Requires input from stakeholders
- Respond to Systemic Issues recommendation
- Change to AFCA’s Operational Guidelines (if required)
- Change to systems or processes (if required)
Completed work:
- AFCA had completed its own review of the systemic issues function prior to the independent review and initiated the Systemic Issues Transformation project in part to address the different roles AFCA and regulators play.
- Engagement with ASIC and Treasury to address this matter.
Next steps:
- Continue engagement with ASIC to confirm our role in managing systemic issues and in providing public transparency about systemic issues and outcomes.
- Further develop our focus and understanding of Recommendation 12 in the context of the current broader regulatory framework, as well as the investigations and insights from work delivered for Recommendation 13.
- Develop an implementation plan and stakeholder engagement.
- Update AFCA Operational Guidelines, and guidance (if our role changes).
13. Improving transparency of systemic issues in public reporting
Status: Completed in 2022
Report recommendation
AFCA should be more transparent in its public reporting of systemic issues, including on a de-identified basis as appropriate. This would encompass factors such as the industry to which the systemic issues relate, the nature of the complaints, the number of affected consumers, total value of remediation and reporting to the regulators.
Scope
- Requires change to systems or processes
Completed work
AFCA had completed its own review of the systemic issues function prior to the independent review and initiated the Systemic Issues Transformation project which addresses public reporting.
Increased the visibility of systemic issues with input from ASIC and communicated to key stakeholders. This included launching the new AFCA FY21-22 Systemic Issues Insights Report, which features data and findings from a range of systemic issues cases across the financial services industry, and provides an opportunity for members to learn from others’ experiences. The report will be released bi-annually.
14. Amending legislation to no longer require authorised credit representatives to be AFCA members
Status: Legislative change required
Report recommendation
The National Consumer Credit Protection Act 2009 should be amended to no longer require authorised credit representatives to be members of AFCA.
Scope
- Requires change to AFCA Rules or Operational Guidelines
Next steps
- Awaiting Government direction.
- Investigate membership options and impacts, and update AFCA Rules and Operational Guidelines (if required).
