Last updated: March 2022

Contents

• Fairness: Recommendations 1 and 2
• Independence: Recommendation 3
• Efficiency and Timeliness: Recommendations 4 and 5
• Jurisdiction: Recommendations 6
• Funding: Recommendations 7 and 8
• Transparency and Accountability: Recommendations 9, 10 and 11
• Other: Recommendations 12, 13 and 14

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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 change to AFCA Rules or Operational Guidelines
• 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.

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2. Ensuring all AFCA decisions consider what is fair in all circumstances

Status: On track for completion 2023

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

Existing work underway

The AFCA Fairness Jurisdiction Project has completed it 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 tool which ensures AFCA decision makers are consistent when applying AFCA's fairness jurisdiction to complaints
• New decision templates highlighting our approach to fairness when making decisions
• Apprehended bias policy sets out how AFCA’s people remain impartial when working to resolve complaints.

Next steps

AFCA has published the AFCA Fairness Jurisdiction Project outcomes report which provides information on how AFCA ensures it is applied consistently and in a way that is fair for members and complainants.

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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

• Requires change to AFCA Rules or Operational Guidelines
• Establish new AFCA Approach
• Requires change to systems or processes
• Requires input from stakeholders

Existing work underway

An internal working group is focused on embedding practices that promote impartiality during the complaint process.

Next steps

Update AFCA Rules and Operational Guidelines, and develop a new AFCA Approach with input from key stakeholders.

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4. Addressing poor conduct by some paid advocates

Status: On track for completion 2023

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

Existing work underway

An internal working group is focused on addressing poor conduct from paid advocates.

Next steps

Update AFCA Rules and Operational Guidelines, and develop a new AFCA Approach with input from key stakeholders.

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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

Existing work underway

AFCA reports annually about the timeliness of complaint handling.

AFCA has a continuous improvement program focused on improving operational efficiency and effectiveness, and is replacing its complaint management system.

An internal working group is focused on addressing aged complaints.

Next steps

Review 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.

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6. Complaints from sophisticated or professional investors

Status: On track for completion 2022

Report recommendation

AFCA should exclude complaints from sophisticated or professional investors, unless there is evidence that they have been incorrectly or inappropriately classified.

Scope

• Establish new AFCA Approach
• Requires change to AFCA Rules or Operational Guidelines
• Requires change to systems or processes
• Requires input from stakeholders

Existing work underway

An internal working group is focused on addressing how AFCA responds to complaints from sophisticated and professional investors.

Next steps

Update AFCA Operational Guidelines and develop a new AFCA Approach with input from key stakeholders.

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7. Ensuring funding model design does not disincentivise firms from defending complaints

Status: On track for 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

Existing work underway

From 10 March to 22 April 2022, AFCA invited members, industry bodies and other stakeholders to submit feedback and questions to its funding model consultation.

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 registration fee of $375.55
• A simplified complaint fee structure that reduces complexity and reduces complaints fees.

Next steps

AFCA has finalised its new funding model. The new funding model will come into effect on 1 July 2022. For more information visit the funding model consultation page.

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8. Improving transparency of AFCA fees and the services and activities they fund

Status: On track for completion 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.

Existing work underway

From 10 March to 22 April 2022, AFCA invited members, industry bodies and other stakeholders to submit feedback and questions to its funding model consultation. The new model includes a simplified and easy to understand fee structure which will allow members to more easily understand the fees incurred by complaints at different stages of our process. For more information visit the funding model consultation page.

Next steps

In preparation of the AFCA Annual Review 2022, AFCA is currently exploring ways to publish additional financial information to better illustrate how funds are spent to support the delivery of AFCA's service.

 

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9. Enhancing visibility, accessibility and independence of the forward-looking review mechanism

Status: On track for completion 2023

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

Update AFCA Rules and Operational Guidelines, and enhance the forward-looking review mechanism with input from key stakeholders.

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10. Improving visibility of the Independent Assessor to all parties to a complaint

Status: On track for completion 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

Next steps:

Investigate options to enhance the visibility of the Independent Assessor and inform key stakeholders.

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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
• Requires input from stakeholders

Next steps:

Investigate consultation process options and preferences with input from key stakeholders.

Develop formal consultation process to identify any unintended consequences of new AFCA Approaches and inform key stakeholders.

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12. Systemic issues that have been referred to ASIC or another regulator

Status: On track for completion 2022

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 change to AFCA Rules or Operational Guidelines
• Establish new AFCA Approach
• Requires change to systems or processes
• Requires input from stakeholders

Existing work underway:

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 role clarity between AFCA and regulators.

Next steps:

Engage with ASIC to clarify our role in managing systemic issues and inform key stakeholders.

Update AFCA Rules and Operational Guidelines, and regulatory guidance (if our role changes).

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13. Improving transparency of systemic issues in public reporting

Status: On track for completion 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 AFCA Rules or Operational Guidelines
• Requires change to systems or processes

Existing work underway

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.

Next steps

Investigate options to increase visibility of systemic issues with input from ASIC, and inform key stakeholders.

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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

Engage with government about legislative change to confirm timing.

Investigate membership options and impacts,  and update AFCA Rules and Operational Guidelines (if required).

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