A pilot project aimed at identifying complaints without merit earlier in its process is among the initiatives the Australian Financial Complaints Authority (AFCA) has under way to support efficient and timely handling of the 70,000 complaints it receives annually. 

The ombudsman service is also in the midst of an external review of its funding model and working to transform the way it identifies and addresses systemic issues, AFCA’s latest Member Forum has heard.

Opening the biannual Forum, Chief Operating Officer Justin Untersteiner said AFCA was proud of what it had achieved in its first two years but there was more to do in making its service to consumers and its 41,000 members even better.

“We have never been as busy as we are today,” Mr Untersteiner said. “We are working with our members and consumers to resolve complaints faster than we ever have before –providing resolutions for complainants and supporting financial firms to minimise disputes. We also acknowledge there are opportunities to improve and enhance our service.”

Complaints without merit

AFCA recently ran a three-month pilot project to test a new approach to assessing the merit of certain kinds of complaints at the very early stages of its process, Mr Untersteiner said.

In the pilot, the time taken to complete the selected cases was halved and in some cases the fee charged for the pilot cases was as much as 75 per cent less than in comparable cases. 

AFCA is further analysing the results of the project. “The balancing act here is to ensure we are not closing complaints that do have merit – sometimes the only way to determine this is through a full investigation,” he said. “We will only decline to consider a complaint in this manner in limited circumstances and where there are compelling reasons.” 

Mr Untersteiner said AFCA had also been working closely with Australian Securities and Investments Commission, Treasury, members and consumer advocates to address issues associated with a small number of paid representatives who have been causing issues in its external dispute resolution system.

“We have made changes to detect and deter poor behaviour from paid representatives,” he said. “We were very pleased to see the new licencing requirements come into place for these firms as of July 1.”

Timeliness

Discussing timeliness, Dr Smith said that – while the number of complaints where delay occurred was small – AFCA had implemented a series of efficiency initiatives that were having an impact.

“We understand that parties to a complaint want the answer to their issues as soon as possible, and we are working on delivering the fastest pathway to resolution,” she said. “We know that timeliness is a key aspect of a fair process.”

These measures include the development of specialist teams, strengthened workflow management and triage mechanisms, enhanced exception reporting, aged file prioritisation, key performance indicators for timeliness, and enhanced communication to keep parties informed of progress.  

Dr Smith noted that on average AFCA was resolving 50 per cent of cases within a month, 71 per cent within 90 days and 92 per cent within 180 days. 

Many of the small minority of complaints that were older than 365 days were “paused” because of firm insolvency and while awaiting legislation of a Compensation Scheme of Last Resort, she said. Other cases were extremely complex for reasons outside AFCA’s control.

Funding model 

Mr Untersteiner also told the Forum that AFCA had commissioned an external review of its funding model, currently a “hybrid” based on the models of its three predecessor schemes. The review was developing options to be discussed with members and other stakeholders, he said.

“We have brought in PwC … to assist in the development of options which ensure our funding model is cost-effective, fit-for-purpose and sustainable,” he said. “AFCA will ensure the funding model we develop is commercial, proportionate and equitable across our member base.” It will continue to be free for consumers.

Systemic Issues

In another development, AFCA is beginning a transformation project in its systemic issues function – where AFCA plays a critical role in identifying and addressing wider issues from the individual complaints it sees.

Again, the existing process was adopted from AFCA’s predecessor schemes. 

Dr Smith said the transformation project would, among other things, focus on data and trends analysis as a way to enhance the identification, investigation and remediation of systemic issues. The project would seek to avoid duplication with other agencies and regulators and it would result in more engagement with financial firms about potential issues.

  • You can read Mr Untersteiner’s and Dr Smith's full speeches here.
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