Updated: 26 March 2024

Updated: 25 March 2024

The Australian Financial Complaints Authority (AFCA) has now resolved nearly two-thirds of the business interruption (BI) insurance complaints it has received since the start of the 2020 pandemic, having been able to take some complaints off pause after the finalisation of other legal action.

Some complaints had been placed on hold while AFCA awaited the final outcome of a series of legal actions by insurers and businesses affected by COVID lockdowns that were aimed at settling the legal interpretation of certain policy wordings.

The legal actions included an initial hearing of a test case in the NSW Supreme Court, a second test case hearing on different issues by the Federal Court, an appeal to the Full Court of the Federal Court, and then an application to the High Court for special leave to appeal. 

After the High Court declined that leave to appeal, AFCA was able to begin considering the cases that had been on hold because they involved questions the courts were considering.  

Its first decisions are available here and here. While each decision depends on the particular circumstances of the complaint, these first determinations show broadly how the test cases might apply. Other decisions  are also available via the Decisions page of our public website.

At AFCA, each case must be considered individually, according to its particular facts and circumstances, and this process is now under way except for those cases potentially affected by pending class actions.  

As at 28 February, AFCA had received 418 Covid-related BI insurance complaints since the start of the pandemic in 2020.

  • 257 (or 62% of the cases) had been closed
  • 161 remained open
  • Of those remaining open, 110 complaints were on hold because they could be affected by class actions still pending in the Federal Court. AFCA remains in contact with these complainants.
  • The balance of the complaints – about 50 – were progressing.

As an independent ombudsman service AFCA seeks to help parties reach agreement on a resolution to the complaint. If that’s not possible, AFCA can make decisions (also known as determinations) that are binding on the firm if accepted by the complainant.

In some cases, such as higher-value or complex complaints, a panel is appointed to make the decision, rather than a single ombudsman. A panel is made up of an AFCA ombudsman, a consumer representative and an industry representative.

Decisions are not binding on the complainant, however, who is able to pursue their complaint in another forum, such as a court, if they do not accept AFCA’s determination.

As always, AFCA encourages financial firms to seek to resolve complaints through their internal dispute resolution processes.   

AFCA and test cases

Under the AFCA Rules, a member financial firm must seek AFCA’s consent to bring a test case about a matter that would otherwise be handled by AFCA as a complaint.

AFCA cannot initiate its own test case and, once it provides approval to the member firm, it is not involved in the filing or running of a test case or any appeals. AFCA does not provide any financial, legal or other support.

One of the factors considered before agreeing to allow a member firm to treat a complaint as a test case is whether there are important issues of law to be decided.

In addition, the financial firm must meet AFCA requirements such as agreeing to pay the complainants’ legal fees incurred in the test case.


Test Case 1

You can read the NSW Court of Appeal judgment in the first test case here.  

Test Case 2

A full copy of the Federal Court judgment, delivered by Justice Jagot on 8 October 2021, and summary is available here:

A full copy of the Full Court judgment, delivered on 21 February 2022, and a summary is available here:

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