Responses to queries raised during the consultation

We thank stakeholders for their engagement in the consultation process. Below we have answered some of the questions that came up during the consultation.

Read the questions

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AFCA consulted on changes to its Rules and Operational Guidelines from 27 March – 22 May 2023. The consultation is now closed.

The proposed changes were developed to address recommendations made in Treasury's Independent Review of AFCA – 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.  ​  

All of the proposed amendments respond to feedback from our stakeholders, including government, AFCA members, community stakeholders and AFCA colleagues.

Frequently Asked Questions

What is the Rules Review project? 

When AFCA welcomed the Independent Review in 2021, we identified recommendations that would require changes to our Rules and Operational Guidelines. 

In 2022, we commenced a program of work to review our Rules and Operational Guidelines and inform a set of draft changes that we could take to stakeholders.  

This process included engaging with an external independent expert to assist with drafting the changes.  

Engaging an expert during this process helped us to ensure the proposed changes are worded clearly and unambiguous. 

Why did AFCA propose amendments to its Rules? 

Treasury's Independent Review of AFCA made a number of recommendations that require Rule and Operational Guideline (OG) changes. To help us deliver on these recommendations, and following a comprehensive review and internal stakeholder feedback, we proposed a package of Rule and OG changes and consulted with stakeholders. 

In addition to responding to the Independent Review recommendations, the proposed amendments included some additional changes to help ensure AFCA’s Rules and OGs remain accurate, up-to-date and provide clear guidance about AFCA’s jurisdiction and processes.  

What is changing? 

AFCA proposed changes to its Rules and Operational Guidelines in the following general areas below. You can find a full summary of the proposed changes on our website:  

  • The management of unreasonable and inappropriate conduct within the scheme, to strengthen AFCA’s ability to deliver procedural fairness under Recommendation 2, to manage the conduct of fee paid representatives who engage with the scheme under Recommendation 4, and to build greater efficiency and timeliness in complaint handling in response to Recommendation 5.   
  • Dealing with complaints where an appropriate offer of settlement has been made or where issues in dispute have been previously settled.  These changes respond to Recommendations 1, 2, 5 and 7 to ensure only unresolved issues in dispute are progressed and that matters do not progress to case management or decision status where appropriate offers of settlement have already been made.   
  • Excluding complaints lodged by sophisticated or professional investors unless misclassified, as required by Recommendation 6.     
  • To enhance the visibility, accessibility and performance of the Forward Looking Review mechanism, under Recommendation 9.   
  • Clarity about the effect of AFCA determinations and how the slip rule works to ensure greater transparency and understanding of AFCA’s decision making under Recommendation 2. This is designed to ensure that complaints are finalised in a more timely and efficient manner under Recommendation 5.   
  • Minor changes to definitions and language to update certain areas of the Rules arising from legislative change, to give greater clarity and transparency of the scheme’s operation overall.  
  • Minor changes to clarify AFCA’s reporting and transparency obligations.   

All of the proposed amendments respond to feedback from members, our AFCA colleagues, government and community stakeholders.  

The proposed changes will help us to provide a world-class ombudsman service – improving practices, minimising disputes and meeting diverse community needs.

What was the consultation process?

  • AFCA’s consultation paper was released on 27 March 2023. 
  • The consultation period ran from 27 March to 22 May 2023 
  • AFCA will consider and respond to consultation submissions and feedback between May and September 2023.
  • The AFCA Board will submit proposed changes for ASIC approval in September 2023. 
  • We are aiming for the approval process to be complete by 31 December 2023 (subject to ASIC approval).
  • Our updated Rules and Operational Guidelines will commence on 1 July 2024. 

How can I make a submission? 

The consultation is now closed and AFCA is no longer accepting submissions. We received a total of 37 formal written submissions.

Read more

I have a question about the Rules Review project/making a submission 

If you have any questions about the proposed changes, or the consultation, please email

Where can I find more information about the proposed amendments to AFCA’s Rules and Operational Guidelines?

AFCA’s consultation paper is available to read and download on our website. 

AFCA held two webinars in April. During these webinars, we took our stakeholders through the proposed changes in more detail. These webinars are available to stream on our website. 

Will AFCA propose Rules changes in the future? 

Ensuring our Rules are clear and effective is part of our existing and ongoing commitment to continuous improvement.  

As part of our Rules governance enhancement activities, we will also be implementing a yearly Rules and Operational Guideline review process.   

We will continue listening to feedback, and openly and transparently engaging with members on any changes. ​

Responses to queries raised through engagement

AFCA published answers to questions raised by stakeholders during the consultation. 

About the Consultation  

Did AFCA consider feedback and suggested changes to other areas of its Rules and Operational Guidelines? 

AFCA only sought feedback and submissions in relation to the 13 proposals outlined in the consultation paper. Suggestions outside of this scope were not considered as part of the consultation.

However, as part of AFCA’s commitment to continuous improvement, we will be reviewing our Rules and Operational Guidelines on an annual basis.  As such feedback and suggested changes to other areas of the Rules and Operational Guidelines were welcomed and may be considered in upcoming annual reviews. 

Why did AFCA only propose these changes and not open to other changes? 

The Independent Review Report stated that AFCA was performing well in a difficult operating environment and changing regulatory landscape, but needed to continue to develop and improve its procedures as it consolidates its place in the financial system.  

The Review Report set out 13 Recommendations for AFCA to implement, and 1 Recommendation to Government. A number of these Recommendations require changes to AFCA’s Rules or Operational Guidelines. The proposed changes address these Recommendations.  

As outlined above AFCA will be implementing an annual review process to ensure that our jurisdiction, processes and procedures remain clear and up to date and meet the needs of the financial system.  

Why did AFCA not increase its monetary limits?  

The proposed changes were intended to address the Recommendations arising from the Independent Review of AFCA, with some minor additional amendments to increase the clarity and operation of the Rules. 

The Review Report did not recommend that AFCA increase its jurisdiction or Monetary Limits. The Recommendations were directed at improvements within AFCA’s current jurisdiction.  

The proposed changes did not increase our jurisdiction or change the scope of the dispute resolution scheme or its jurisdiction. 

AFCA’s monetary limits are due for review and adjustment in January 2024 in line with section D.4.3 of the Rules.  

Proposals 1 & 2 - Paid Representatives and Complainants 

Will AFCA consider requiring Paid Representatives to be AFCA members?  

The Australian Securities and Investments Commission (ASIC) is the regulator of the financial services industry and is responsible for the oversight of which entities are required to be members of AFCA.  

Feedback or submissions in relation to this matter are more appropriately referred to ASIC. 

We note however under the changes outlined in Proposal 1 AFCA may exercise its discretion to cease consideration of a complaint where it is satisfied that the Paid Representative does not hold an Australian Credit License (ACL) or Australian Financial Services License (AFSL) where this is required by law. AFCA recognises that in 2021, the law was amended to require providers of debt management services to hold an ACL and providers of claims handling and settling services to hold an AFSL. These reforms were designed to protect consumers who use their services.  

Why has AFCA focused on the conduct of paid representatives and complainants? What about financial firms? 

The changes regarding Paid Representatives are a direct response to Recommendation 4 of Treasury’s Independent Review.  We are required to make these changes to allow AFCA to deal with poor conduct by Paid Representatives.   

We have expectations of all parties when they come to AFCA. The Engagement Charter sets out that we expect all parties to engage with each other and AFCA in a way that is: 

  • transparent and honest  
  • respectful and fair  
  • in good faith  
  • efficient and cooperative  

These expectations are the same for Complainants, representatives, Financial Firms and AFCA staff. 

Under our current Rules, AFCA has the ability to report a Financial Firm who fails to reasonably cooperate with AFCA to the regulator (ASIC).  

Under the current Rules AFCA has a limited ability to deal with unreasonable or inappropriate behaviour from Complainants and/or Paid Representatives. These proposed changes will ensure that AFCA can appropriately manage unreasonable conduct within the scheme across the board.  

What about AFCA's conduct, who monitors and considers this? 

AFCA has a service complaints function to deal with complaints about AFCA’s standard of service. As part of AFCA’s service complaint function AFCA also has an Independent Assessor who independently reviews complaints about the standard of service provided by AFCA in resolving complaints. Complainants, representatives and financial firms may lodge a service complaint and can raise service concerns with the Independent Assessor if they are dissatisfied with AFCA’s response to their service complaint.  

The Independent Assessor reports on issues affecting AFCA’s complaint handling performance and makes recommendations to AFCA in response to issues arising from service complaints. The Independent Assessor is appointed by, and reports to, the AFCA Board and works in accordance with the Independent Assessor’s Terms of Reference. The Independent Assessor is not part of the day-to-day running of AFCA and does not answer to AFCA’s senior management or Chief Ombudsman. 

AFCA is regulated by ASIC and Regulatory Guide 267 outlines in detail the oversight role that ASIC performs. 

AFCA is required to have an independent review of its operations every five years, in accordance with RG 267. 

How did AFCA land on 12 month exclusions as a suitable period? Did AFCA compare this against what other EDR schemes do?  

Under proposed Rule B.6 AFCA may exercise the discretion to exclude a Complainant or Paid Representative for a period of up to 12 months. The exclusion period will be determined on a case by case basis, it may be that AFCA will decide on a shorter period of exclusions depending on the particulars of the case. 

AFCA considers an exclusion period of up to 12 months to be a reasonable and proportionate period.   

When drafting the proposed changes, we sought a period of exclusion that appropriately balanced efficiency for AFCA, and fairness for the excluded party. An exclusion period that is too short and would elapse quickly could create potential problems if the Complainant or Paid Representative continued to engage in inappropriate conduct, possibly requiring AFCA to going through the re-exclusion process again. If AFCA could exclude a party for longer than 12 months, fairness would require a procedure whereby the excluded party could ask AFCA to lift the exclusion, this process would not be as efficient or effective for AFCA. Additionally, the Independent Review Report recommended that AFCA should ensure it retained the flexibility to reconsider an exclusion in the event that the conduct of a Paid Representative improves in the future.   

From a fairness point of view for Complainants, we were also conscious of the usual timeframe restriction for non-superannuation complaints being two years from the date of the IDR response, so a maximum exclusion period of 12 months is well short of this period. 

Do the proposed changes under Rule A.8.4 include inappropriate conduct that is directed towards Financial Firm staff?  

Proposals 1 and 2 deal with AFCA’s management of unreasonable and inappropriate conduct within the scheme, and directly respond to AFCA’s ability to deliver procedural fairness under Recommendation 2, to manage the conduct of fee Paid Representatives under Recommendation 4, and to build greater efficiency and timeliness in complaint handling in response to Recommendation 5. As such, it relates only to conduct towards AFCA staff and any impact such conduct has on AFCA’s complaint handling.  

AFCA is committed to providing timely fair and efficient resolution of complaints. AFCA also has a duty of care and associated legal obligations to ensure staff safety and wellbeing. In addition to this AFCA needs to ensure that all parties to a complaint are engaging in a meaningful and appropriate way and contribute to the resolution of complaints.  

AFCA’s Engagement Charter shares AFCA’s values and outlines the behaviour we expect from all parties to a complaint. The Engagement Charter also sets out how AFCA will respond to parties that fail to comply with its expectations when resolving a dispute.  

How will AFCA ensure disadvantaged and/or vulnerable complainants are not excluded, particularly if their conduct is inappropriate but they suffer from mental health and/or other personal issues? 

The proposed changes are not intended to limit access to AFCA’s scheme for individuals suffering from mental health concerns or personal issues. They really are for the extremes of behaviours that our staff have experienced in a very small number of cases.   

AFCA has undertaken a significant program of work to ensure its service remains accessible to Complainants living in vulnerable circumstances. AFCA’s Rules, however, currently only provide limited ability to exclude or close a complaint where a Complainant’s conduct towards AFCA staff is inappropriate and unreasonable and does not comply with AFCA’s Engagement Charter. 

AFCA has a duty of care to its employees and these changes are intended to ensure a safe working space for all of our staff.  

AFCA will not lightly exclude a complaint or Complainant and will generally put Complainants on notice of AFCA’s expectations giving them the opportunity to remedy their behaviour or appoint a representative to liaise with AFCA on their behalf. Closure of complaints or exclusion of a Complainant will occur only if these attempts to mitigate the conduct are unsuccessful.  

Proposal 3 - Appropriate settlement offers  

Who decides what an appropriate settlement offer is, and how will AFCA assess this? Will the Complainant and/or their representative have the opportunity to provide a case about what they consider is appropriate and why? 

An assessment under Rule A.8.3 is normally conducted at Case Management and by case workers in AFCA’s case management teams. This is appropriate because Rule A.8.3 only applies to complaints that fall within AFCA’s jurisdiction to consider.  

Proposed Rule A.8.3(d) is intended to capture situations where the Complainant has either been appropriately compensated or where the Complainant failed to accept an appropriate remedy or compensation.  

As set out in the marked up Operational Guidelines, AFCA will consider whether a Financial Firm’s offer of settlement or compensation payment is appropriate in all of the circumstances of the complaint and falls within the range of an appropriate outcome to the complaint should it proceed to a determination.  

AFCA regularly considers what form of compensation or settlement is appropriate to bring finality to complaints. As set out in the marked up Operational Guidelines, under the newly proposed Rule A.8.3(d) AFCA will consider whether a Financial Firm’s offer of settlement or compensation of payment is appropriate in all of the circumstances of the complaint and falls within the range of an appropriate outcome to the complaint should it proceed to determination.   

The assessment of Rule A.8.3(d) will involve a similar assessment and considerations that AFCA applies under the existing Rule A.8.3, which already provides that AFCA may decide not to continue to consider a complaint if the Complainant has already been appropriate compensated for their loss and AFCA would not aware any further amount.  

Where AFCA decides to cease consideration of a complaint in accordance with the newly proposed Rule A.8.3(d), the Complainant and/or their representative will have the opportunity to provide an objection/submission about why they disagree with AFCA’s decision. This process is outlined in newly proposed Rules A.8.5 and A.8.6.  

Proposal 4 - Previous settlement agreements  

In relation to Rule C.2.2(g) how would AFCA apply this if there is an allegation of duress or misleading deceptive conduct by a third party representative in arriving at the settlement? 

Proposal 4 does not change AFCA’s approach to previous settlement agreements. Under AFCA’s current approach, as set out in AFCA’s Approach to Terms of Settlement, complaints subject to a previous binding settlement agreement are excluded under AFCA’s general discretion contained in Rule C.2.1  

Proposal 4 inserts Rule C.2.2(g) to include an additional example of when AFCA may exercise its direction to exclude a complaint, in circumstances where the issues raised are subject to a full and final settlement agreement between the parties. This proposal provides greater transparency as to the reason AFCA may exclude a complaint.  

The proposed Rule also provides a carve out for settlements which were obtained by fraud, duress or misleading and deceptive or unconscionable conduct.  This reflects AFCA’s existing approach when dealing with previous settlement agreements.   

The Operational Guidelines will specify relevant factors to determine this and reflects current practices at AFCA.  

In relation to previous settlement agreements will this assessment be conducted by the Rules Team or in Case Management?  

If a Complainant seeks to lodge a new complaint that has been subject to a previous settlement, we encourage the financial firm to advise us of that matter as soon as possible during our registration and referral period.  If that occurs, we will stream the matter to our Rules Team.  If that does not occur, then the complaint will move to case management and an investigation will commence.   

Where a jurisdictional issue is identified later in our process, the assessment will be conducted by the relevant Case Management teams with assistance from the Rules Team if required.   

Proposal 7 – Non acceptance of a Determination  

What does AFCA do if a complainant changes their mind in relation to a Determination?  

Under Rule A.15.3 a Determination is binding upon both parties if accepted by the Complainant within 30 days The Complainant has 30 days to accept the Determination  

The Operational Guidelines provide that: 

  • the decision to accept or reject a Determination is an important decision.  
  • if a Complainant accepts a Determination, they cannot later change their mind and reject it.  

Once a Complainant fails to accept a Determination the complaint file is closed AFCA’s process has come to an end. Any deviations from AFCA’s usual process including circumstances where a Complainant later wishes to accept a Determination would need to be discussed on an individual basis with the Financial Firm directly.  

Proposal 9 - Consistency of language about AFCA’s monetary limits 

How does AFCA define a “claim”, does this mean per case? 

A claim for the purposes of AFCA’s Rules and jurisdiction is not the same as a case or complaint. A complaint may be made up of one or multiple claims, depending on the details.  

A claim is a set of set of events and facts that together may lead to losses and gives the Complainant a right to a remedy if the merits of the claim is established.  The AFCA Approach to identifying a claim and the Operational Guidelines provide further explanation and guidance on what a claim is.  

The Operational Guidelines set out: 

That for the purposes of the Rules, the term ‘claim’ should not be confused with an ‘insurance claim’ which is an application for benefits under an insurance policy. Rather, a ‘claim’ for the purposes of the Rules constitutes a set of events and facts that together lead to the losses, and give the Complainant the right to ask for a remedy.  

We do not aggregate a number of claims into one claim just because the claims all arise from an ongoing relationship between a Financial Firm and a Complainant. Nor will we permit a complaint that is properly a single claim to be ‘split’ and treated as multiple claims (with the monetary cap applying to each claim). 

The following examples illustrate our approach to determining whether the 

Complainant has one claim or multiple claims: 

  • If a financial planner provides a statement of advice recommending a number of investments and the Complainant disputes the suitability of this advice, we are likely to treat the complaint as one claim. This is because the claim arises from a single statement of advice.  
  • If a financial planner gives advice recommending an investment and then separate advice recommending another investment and the Complainant disputes the suitability of both pieces of advice, we are likely to treat this complaint as involving two claims, with the effect that a cap applies in relation to each claim.
  • Where the Complainant claims a credit provider failed to meet its obligations in relation to a number of loans over a period of time, we are likely to treat the credit decision for each loan as a separate claim and will not aggregate the claims.  
  • If the Complainant claims a bank allowed a third party to access funds from the Complainant’s account without the proper authority, we are likely to treat this as one claim and will aggregate all the unauthorised withdrawals. This is because the withdrawals all arose from the same set of circumstances, that is, the bank allowing the third party unauthorised access to funds in the account. 
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