Updated: 30 October 2023

AFCA has made early “merit assessment” a permanent feature of its process after a pilot program showed this made complaints handling faster, cheaper and fairer for all parties. 

This type of assessment at AFCA’s initial case management stage means unmeritorious complaints – those where there is clearly no error or financial loss – can be identified early.  

If a complaint is found to be without merit, AFCA has discretion to “exclude” the complaint under its Rules (specifically Rule A.8.3). 

The process was tested in a three-month pilot last year which found the time taken to resolve the selected cases was half that of comparable cases, and the fee charged was as much as 75 per cent lower.    

Further analysis of the pilot has resulted in the decision to adopt merit assessment as a permanent feature, to be applied to types of complaint where the pilot showed it worked well and fairly.  

“Our pilot was in direct response to feedback from members that the cost of paying for some determinations – the final, formal decision-making stage of our process – can outweigh the value of the initial service or product that was provided,” Chief Operating Officer Justin Untersteiner said.  

“Firms told us this meant they sometimes made a commercial decision to concede the complaint on the basis of cost, regardless of the merits of the case.” 

The issue was made worse by the conduct of a small number of third-party paid representatives using questionable tactics, with complainants refusing to consider a reasonable resolution in the earlier stages of AFCA’s process, he said. 

Merit assessment will be applied in cases where sufficient information about a complaint is available at an early stage and it clearly shows there is no error and/or loss. Complaints that raise more complex issues, with significant documentation involved, would still require an investigation to reach a view on what has most likely occurred. 

“The balancing act is to ensure we are not closing complaints that do have merit. Sometimes the only way to determine this is through further investigation,” Mr Untersteiner said. 

The merit assessment is a key part of AFCA’s response to Recommendations 4 and 7 of the Independent Review of AFCA, by addressing poor conduct by some paid advocates and ensuring its funding model does not deter firms from defending complaints.   


Published: 5 May 2022


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The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent help with financial disputes. It is a one-stop-shop for consumers and small businesses who have a dispute with their financial firm, over things such as banking, credit, insurance, advice, investments or superannuation. Where an agreement cannot be reached between parties, AFCA can issue decisions that are binding on financial firms.

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