29 July 2021

Plenary – Justin Untersteiner, Chief Operating Officer

I’m very excited to be here today, to provide an update on AFCA’s operations and initiatives for the last 12 months.


AFCA has now been operating for more than two and half years. We are proud of what we have achieved in this time, and we are doing more work to make our service even better.

Our goal at AFCA is to be a world-class ombudsman service – by improving standards and minimising disputes, meeting diverse community needs and being trusted by our stakeholders.

While this goal is ambitious, we strongly believe that we are on the road to achieving this.

I’ve said this many times: we want to work proactively with our members to reduce complaints in the industry.

In fact, in an ideal world we wouldn’t receive any complaints. We are very focused on doing what we can to support better outcomes for you, our members, and for consumers and small businesses.

In the last 12 months, between 1 July 2020 and 30 June 2021, we received just over 70,000 complaints.

Overall, complaints were down 12 per cent compared to 2019-20 – however, this was against a previous financial year which saw a large spike in complaints at the beginning of the pandemic particularly in areas such as travel insurance, financial difficulty and early access to superannuation.

However, if we compare the number of complaints to the predecessor schemes, we can still see a large increase in complaints, last year we saw approximately 40% more complaints than the combined total for the three predecessor organisations.

Pleasingly, our data shows that nearly 70 per cent of cases were resolved by agreement after AFCA brought the parties together. This shows a willingness to resolve issues early on both sides, and we’re very happy with this figure.

Significantly, complaints involving financial difficulty were down nearly 40 per cent from the numbers we saw in the previous year. This is a great outcome and reflects the positive impact the COVID-19 response from government and industry had.

I don’t think we know the true impact of the pandemic yet, and so I don’t want to get to too optimistic about the low financial difficulty numbers, I do think we will see some challenges over the coming 1-3 years.

So where did we see increases? Well, complaints related to personal transaction accounts rose 48 per cent, and unauthorised transactions accounted for a large portion of those complaints.

And, complaints about electronic banking increased 76 per cent. Unauthorised transactions accounted for a third of those complaints and mistaken internet payments made up a further 19 per cent. This is of concern to us and we are monitoring this closely.

I also note that our membership base has grown since opening our doors in 2018.

As of 1 July 2021, more than 41,000 financial firms hold AFCA membership. This includes a growing list of voluntary members who see the value of our services as well as the credibility and confidence that AFCA membership provides to consumers.

So while we have never been as busy as we are today, 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.

And while we are certainly proud of the work we have achieved so far; we also acknowledge that there are opportunities to improve and enhance our service.

We are engaging with our members every single day, via industry liaison meetings, with industry associations through one-on-one meetings, through industry forums and of course through our complaint handing processes. And having operated for almost 3 years now, it is through this our engagement that we have identified some areas which we understand we need to focus on and tweak or improve.

I want to touch on a few of these items.

The first is complaints lacking merit.

We have received feedback from a number of members, particularly those running small and medium size businesses, that at times they are faced with complaints lodged against them which on the surface appear to lack merit.

And in a small percentage of these complaints, the complainant refuses to consider a reasonable resolution and seeks to push the complaint all the way to determination.

We have been told that the impact of these types of complaints is that the cost of paying for a determination far outweighs the initial service or product that was offered, putting financial pressure on our members.

We have also been told that this can lead to our members being forced to make a commercial decision which is to concede the complaint, on the basis that it would be too expensive not to.

Finally, we have also heard that this issue is certainly made worse by the conduct of a small number of paid representatives who use questionable tactics to put unreasonable pressure on our members.

We have heard this feedback and we are taking action. We are taking it seriously.

Here’s how.

We recently ran a pilot which concluded in the last few weeks. We used this pilot to measure and test a different approach to dealing with complaints, particularly those in our Fast Track stream. Using our existing rules, we have established a new process to better scrutinise certain complaints at the very early stages of our process.

Under the pilot, where on review of all the available information we assessed the complainant had not appeared to have suffered a loss or the financial firm had not made an error, we wrote out to the member and to the consumer to raise our concerns.

If our investigation told us that the complainant had not suffered loss or the financial firm had not made an error – we closed the complaint.

The balancing act here is to ensure that we are not closing complaints that do have merit –sometimes the only way to determine this is through a full investigation.

And we recognise that in some cases we are dealing with vulnerable consumers who may have challenges which prevent them from properly articulating their complaint. In these cases there may well be a valid issue to be investigated. That’s why we will only decline to consider a complaint in this manner in limited circumstances and where there are compelling reasons.

We were also mindful that the reason we created a Fast Track process to begin with was to deal with lower complexity matters in a streamlined way - so we need to be careful that we don’t ‘tack on’ extra steps that slow down the process and add time and cost.

Let me share with you some of the outcomes of our three-month pilot:

  • Approximately 120 cases were identified for review under the pilot
  • Of these, 106 were closed after assessment because we determined that on the available evidence the complainant had not suffered loss, or the financial firm had not made an error
  • After contacting the consumers and members on these cases, there were only a small number that objected to our assessment.
  • The time taken to complete these cases was halved – they were dealt with much faster than comparable complaints.
  • The average fee charged for these cases was $890. To give context, if those same complaints had closed at the Preliminary View or Determination stage, the fee charged would have been between $2100 and $4000.
  • This tells us that in some cases the fee charged for the pilot cases were as much as 75% less than in comparable cases.


We believe that has demonstrated this process is faster, cheaper, and that it is also fair to all parties involved.

We are currently in the process of finalising our review of this pilot and we hope to make this change a permanent feature of our system. We do believe it will go a long way to addressing the feedback you have given us.

Separately we have worked closely with ASIC, Treasury, our members and consumer advocates to address issues associated with the small number of paid representatives who are causing issues in the system.

We have made changes to detect and deter poor behaviour from paid representees. We were very pleased to see the new licencing requirements come into place for these firms as at 1 July 2021. If you would like to hear more about the changes that have come into place for paid representatives, our Executive General Manager of Operational Delivery Di Ennis will be discussing them in the Banking and Finance session later today.

I am confident that you will see the impact of these changes and that they will have a positive impact on the system.

I want to now turn to another issue which has been raised with us by some of our members.

Fees and the AFCA funding model

We are currently undertaking a review of our funding model to ensure it is cost-effective, fit-for-purpose and sustainable.

Since AFCA commenced handling complaints on 1 November 2018, it has been operating under an interim funding model that is a hybrid, based on aspects of the CIO and FOS scheme funding arrangements and the APRA levy model for superannuation trustees.

The interim funding model was intended to remain in place for the first three years of AFCA operations while AFCA established an evidence base of complaint volumes and complexity in an expanded jurisdiction.

AFCA's interim funding model and fee structure has served the scheme well during our establishment phase. However, it is now timely that the funding model and fee structure are reviewed to ensure they are fit for purpose.

In reviewing this work, we have developed a set of principles to guide any future funding model design. These principles will ensure that the long-term funding model addresses the recommendations of the Ramsay Review, the amendments to the Corporations Act 2001, and provides the optimal outcomes for all relevant stakeholders.

So, for example, let me call out a few principles:

  • The model will incorporate incentives to resolve complaints early and, as appropriate, reflects attributes of a user-pays approach
  • The model will seek to minimise direct sectorial cross-subsidisation to the extent practicable
  • The model will be funded by industry through a transparent process
  • The model will be free for consumers
  • The model will provide funding for community engagement, including outreach activities to raise awareness amongst consumers, in particular vulnerable consumers, and financial firms


Over the past 12 months, we’ve received some feedback about the current design. For instance, today the Superannuation industry pays a levy which is based on the size of the asset pool they have under management.

Some superannuation members have told us that this can lead to poor outcomes, for instance, a trustee who has a large asset base, but a wonderful system that leads to minimal complaints may be paying a much higher levy than a trustee with a smaller asset base but who has terrible systems and a high number of complaints.

We have also had feedback from some of our smaller members who don’t receive many complaints at all, but when they do receive a complaint, particularly one that goes to Determination, the cost can hurt and can seem disproportionate to the issue at hand.

We have bought in PwC to support a forensic review of our current model and to assist in the development of options which ensure that our funding model is cost-effective, fit-for-purpose and sustainable.

AFCA will ensure the funding model we develop is commercial, proportionate and equitable across our member base.

We intend to release information about any changes to our funding model early in the new year, giving our members and other stakeholders and opportunity to provide feedback to us

We will also carefully consider any findings from the AFCA Independent Review as part of our funding review.

So please look out for communication from us later in the year, we want to hear from you.


Finally, I wanted to mention that recently the Federal Government released the exposure draft legislation to establish the Compensation Scheme of Last Resort (CSLR).

The Government is seeking comments on the key design features of the compensation scheme of last resort, including the scheme’s coverage, payment arrangements, funding arrangements, governance, and mechanisms to maintain the integrity of the scheme.

AFCA welcomes the announcement and reconfirms its support for the creation of a CSLR.

AFCA believes Australia needs a compensation scheme for people who have the right to a remedy for financial misconduct but who are left without redress when a financial firm becomes insolvent.

This is a Government policy issue, so if you have any questions please head to the Treasury website for more information.

We will not be taking action on cases that relate to insolvent members until the legislation is finalised and the scope is clear.

Plenary – June Smith, Deputy Chief Ombudsman, AFCA

Today I want to share with you some of the important work we have been doing to deliver on our fairness jurisdiction, including work on consistency and timeliness in complaint handling, and the publication of AFCA’s first Engagement Charter.

I will also share our work on transforming of our systemic issues function from the legacy processes inherited from the traditional schemes and highlight some of the key issues that will be discussed in our industry forums today and tomorrow.

AFCA’s Fairness jurisdiction

AFCA’s Fairness jurisdiction is mandated by statute and supported by regulatory guidance. It reflects long-standing and familiar principles of the law and equity and the jurisdiction of AFCA’s predecessor schemes and other domestic and international ombudsman scheme.  It is not new.

There are now a number of court decisions involving AFCA and its predecessor schemes (particularly the Financial Ombudsman Service) where the courts have been clear that AFCA and predecessor ombudsman schemes have a fairness jurisdiction and about how it operates. These court decisions have affirmed that AFCA can apply a fairness approach to determining complaints, while having regard to relevant legal principles and law, but not be required to strictly apply legal principles/law in accordance with its Rules and the contractual tripartite arrangement between AFCA, its members and complainants.

We are very much guided by the law in our assessment of complaints at AFCA.  Fairness is found everywhere in the law, from unfair contract terms to utmost good faith, from best interest duty obligations to fiduciary duties, from misleading and deceptive and unconscionable conduct obligations to the obligation of licences to be efficient, honest and fair.

AFCA has undertaken two external reviews of its decision making since it commenced operation in November 2018. Both reviews have indicated that AFCA is applying its Fairness Jurisdiction consistently and clearly to deliver a fair process and a fair outcome in the overwhelming majority of the 70,000 cases it handles each year and the more than 5000 decisions published annually.

AFCA accepts however there is much more to do.  AFCA has 40,000 member firms that provide services across the broad suite of financial products and services.  After two and a half years in operation, we are very proud of the work we have done but we know we can improve our service to deliver consistent, timely and fair dispute resolution and to improve member and consumer experience. 

AFCA’s Fairness Project was developed to ensure that AFCA understood and could explain its fairness jurisdiction, had a fair process and provided fair outcomes in complaints handling.

We know that consistency of our decision making is important to you.  We achieve this through a range of methods and we document how we might approach a particular type of complaint in our Approach documents, Fact Sheets and other guides.   

We paused some external consultation on our Approach during the COVID pandemic so members could focus on delivery of services to their customers.  Despite this, we developed in consultation with all of you a series of approach documents and fact sheets to deliver consistency and certainty about our approach to COVID 19 related complaints.  Just a few examples of this work include our fact sheets on early release of superannuation and our approach and fact sheets about travel insurance claims. 
AFCA now has:

  • 37 published Approach documents
  • 21 published fact sheets
  • 5 published brochures
  • 19 EDR response guides

There are also many more under development. This library of material is available on the AFCA website and our member portal.
In 2021, we will review our approach in a number of areas, including non-financial loss, scams, death benefits, business interruption insurance and responsible lending, among others.  If you have a suggestion about an area where there is a need for greater clarity about our approach, please let us know. 
We will develop a more formal consultation framework as well now that the immediate need for Australian business to focus on the COVID 19 pandemic has reduced.  This will include consultation through our industry and consumer liaison groups as well as more public processes.
Internally, we spent the last year strengthening our framework for delivering on AFCA’s Fairness Jurisdiction.  This work is now being embedded in our ‘business as usual’ activities.
Among other things, we:

  • concluded consultation on the Fairness Tool
  • finalised and published the AFCA’s Engagement Charter
  • developed and implemented a robust staff training program on AFCA’s jurisdiction and Rules
  • developed our approach to apprehended bias in complaints handling
  • increased our focus on telephone conciliation and mediation techniques
  • enhanced our processes for dealing with challenging behaviour and vulnerability
  • created a significant decisions library and specialist teams with subject matter expertise in areas such as transactions and small business lending
  • introduced revised investigation reasoning tables to ensure staff focus on relevant issues in their investigation and assessment of complaints,
  • revised our decision templates to ensure preliminary views and determinations now specifically call out and explain why that decision is fair. This may be as simple, for example, as saying a decision is fair because the financial firm has or has not met their legal obligations to the complainant.
  • strengthened our quality assurance framework and aligned that to our work understanding customer and member experience.


I want to call out the timeliness of our work.  We know that timeliness is a key aspect of a fair process.  Delay leads to a negative experience for the parties.  We understand that parties to a complaint want the answer to their issues today, not in 12 months’ time.  We know there is work to do here and we are engaging in a series of efficiency and procedural initiatives to deliver greater timeliness in our work.  But, I want to put that in context.

  • In its first two and a half years of operation AFCA received nearly 200,000 complaints and resolved the overwhelming majority of them.  During that time we also resolved over 10,000 complaints inherited from the predecessor schemes and took on the “look back” jurisdiction for complaints back to 1 January 2008. 
  • AFCA has delivered over $600 million in compensation in circumstances where many complaints resolve in favour of the financial firm and no compensation is paid.
  • AFCA employed over 400 new staff during that period and worked through the challenges posed by the pandemic as did all of you.
  • AFCA currently handles 50% of complaints within an average of 31 days.  71% of AFCA’s complaints are resolved within 90 days and 92% are handled within 180 days.  The average time to finalise a complaint is 74 days.
  • There are only 1,489 cases over 365 days at AFCA,  56% of which are paused while we await legislation of a Compensation Scheme of Last Resort or because of financial firm insolvency.  Many of the other files in this category are in the final stages of the process.
  • Some cases are extremely complex due to factors that are not in AFCA’s control – for example, complainants with significant mental and/or physical health challenges and delaying behaviours from financial firms or complainants and their paid representatives.
  • We have also been cognisant during COVID 19 of granting extensions of time to firms and customers who have been unable to meet deadlines and get relevant information to us.
  • However, as I said, timeliness is a key part of fairness and we understand the feedback that this is important to you. 
  • Accordingly, we have introduced a series of initiatives to reduce delay in complaint handling. These include the development of specialist teams, strengthened workflow management and triage mechanisms, introduced enhanced exception reporting, reiterated aged file prioritisation, implemented timeliness KPIs and enhanced our communication strategies to ensure the parties are kept informed about progress. 
  • Firms can also expect AFCA to more actively manage the number and exchange of submissions between the parties and the granting of extensions of time. 

The commencement of ASIC Regulatory Guide 271

As you know, ASIC released its regulatory guide (RG) 271 on 30 July 2020. This guide has updated requirements and guidance for how financial firms must deal with complaints under Internal Dispute Resolution procedures.  The new guide RG271 comes into effect on 5 October 2021.

In summary, RG 271:

  • updates the Standards Australia definition of a complaint
  • updates the maximum IDR timeframes and
  • enhances IDR response requirements.

AFCA will consider our members’ obligations under RG 271 as part of our dispute resolution process from 5 October 2021.  We’re currently working to finalise our approach to the guide and will have more information available to you soon. In the meantime, if you have any questions or concerns about RG 271, you should contact ASIC.

We also think that revised ASIC Regulatory Guide 271 provides a real opportunity for AFCA to work closely with member firms to improve the interface between internal and external dispute resolution and we look forward to discussing that with you over the coming months.

  • I just want to mention our work on scams at this point, which will be the subject of discussion at the Banking and Finance forum.  As Justin mentioned, complaints about personal transaction accounts, electronic banking, mistaken internet payments, unauthorised transactions and scams have significantly increased.
  • In a COVID environment, it is not surprising to see an increase in complaints in this area, But the nature, scope and size of scam activity in the sector is a concern for us all.  This is a fluid and changing area for all participants.
  • AFCA’s role is limited to the financial transaction, not the scam itself, but AFCA has been working proactively with industry and regulators on how we all respond to this challenge.
  • We accept the Approaches that have been applied by AFCA have been developed over a number of years, based on the traditional approach to mistaken internet payments and unauthorised transactions. AFCA is aware that the environment is changing as technology evolves and scams mature, change and shift over time.
  • We are part of inter-agency consultation about the how the law and regulation should respond to this activity.  AFCA is also engaged in ASIC’s consultation in its review of the EPayments Code. This is a policy issue for ASIC.  Our own approach to scam complaints to will reflect the regulatory guidance. There will be no inconsistency of approach.
  • We are also engaging with the regulators (ACCC, ASIC and AUSTRAC) to share information and discuss trends in relation to scam complaints. We continue to be involved in discussions with peak bodies, industry working groups and other stakeholders to better understand the approach we should adopt.

Business Interruption Insurance

In our insurance forum there will be discussion about the business interruption insurance test cases.  We have been working closely with the Insurance Council of Australia and industry to ensure that both industry and AFCA are ready to assess both claims and complaints which may be made by small business under these policies.  We thank the industry for its proactive approach to ensuring small business understand what they can be doing now to lodge a claim.  It is vital that these matters are handled expeditiously and fairly, once the test case process is finalised.

Engagement Charter

Over the last year, AFCA has developed an Engagement Charter to outline the service standards and values stakeholders can expect of AFCA and in turn, AFCA’s expectations for the conduct and engagement of all users of our service in the resolution of complaints.

Key to the Charter is our expectation that all parties should cooperate reasonably to bring finality to a complaint. We want all parties to engage with each other in a way that is transparent and honest, respectful and fair, in good faith.  Procedural fairness is undermined by behaviour that causes inefficiency and delay. 

The Charter also sets out how we will respond to financial firms and complainants that fail to comply with these expectations.  As stated in our Rules, we can, at our discretion, stop engaging with a party in exceptional circumstances.

The Charter is a living document and commences on 1 September 2021. If you have not read it yet, it is available on our website.  It will also be part of our member onboarding experience.  We thank all those members who have consulted with us on this project over the last 12 months and took the time to provide a written submission during our public consultation period earlier in the year.  It has helped us to build a stronger and more meaningful document. 

Systemic Issues

Finally, I want to talk about our Systemic Issues function.

  • AFCA not only handles individual complaints.  It also plays a critical role in the broader consumer protection framework through the identification, remediation and reporting of systemic issues and possible serious misconduct to three regulators, ASIC, APRA and the ATO.   This is a long-established design feature of Australian external dispute resolution schemes This requirement is set out in ASIC’s Regulatory Guide 267 (RG 267) and form’s part of AFCA’s authority to operate.  AFCA has been meeting this requirement since its inception. 

AFCA’s role in identifying and reporting systemic issues clearly benefits consumers who have not lodged a complaint with AFCA, but who may nonetheless be impacted by a systemic breach of obligation identified through this process. 

In addition, AFCA must report possible serious contraventions of the law to the regulators within 15 days of reasonably becoming aware of them.  The Corporations Act also requires AFCA to give particulars of a contravention, breach, refusal or failure to APRA, ASIC or the ATO, as appropriate, if it becomes aware, in connection with a complaint.

Our current systemic issues process was adopted from the predecessor schemes, and it has achieved some great results so far. In AFCA’s first two years for example:

  • AFCA has assessed 2,287 possible systemic issues and 107 possible serious contraventions of the law and conducted 508 detailed investigations into possible systemic issues and serious contraventions of the law.
  • AFCA has undertaken 193 definite systemic issues investigations and 40 definite serious contraventions.
  • This systemic issues and serious contravention work has also led to a range of enforcement actions taken by regulators and provided more than $230 million in financial remediation to consumers and small businesses. Around 3.9 million customers have been affected by these systemic issues.

We have, however, commenced work on transforming this function.  AFCA commissioned an independent review of this function in early 2021 to ensure it was fit for purpose, aligned to the regulatory priorities of the regulators to whom AFCA reports and to recommend ways that it could be enhanced and clarified, including the development of a risk-based framework and digital and data transformation.

Our objectives were:

  • to develop a transformational model that places greater focus on data and trends analysis, more proactively and effectively informs real time identification, investigation, remediation and reporting of systemic issue activity to regulators and ensure AFCA’s systemic issues and remediation functions will be world leading and aligned to the expectations of our stakeholder groups.
  • to seek greater clarity about the role AFCA plays compared to the role played by other agencies and regulators in the consumer protection framework, to avoid duplication of investigation and confusion about responsibilities. 

As a result of this transformation process, financial firms can expect a more interactive and proactive systemic issues investigation process, instead of the more formal paper-based approach we have adopted in the past.
We will also work with our stakeholders to transparently share information about the role and function of the systemic issues and remediation team, so that the process is clearly understood by all. This includes developing better guidance for financial firms about our team’s approach.

We look forward to sharing more information about this work over the coming months.

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