Opening address – David Locke, Chief Ombudsman and CEO

You can watch a recording of this speech here.


Thank you, Rob. And thank you for taking time out of your busy schedules to join us for the next two days.  

I’m David Locke and I am the Chief Ombudsman and Chief Executive Officer at AFCA.    

I would like to begin by acknowledging the Traditional Custodians of the different lands on which we are meeting today, and pay my respects to elders past, present and future – for they hold the songlines, the stories, the traditions, the culture, and the hopes of First Nations Australia.  

This land is, was, and always will be traditional First Nations country.  

I also acknowledge and pay my respect to the Traditional Custodians of the lands on which AFCA works, the Wurundjeri, Boonwurrung, Wathaurrung, Daungwurrung and Dja Dja Wrung peoples of the Kulin nation and the Gadigal people of the Eora Nation. 

For those who have not attended an AFCA Member Forum before, including any new members – welcome. 

Our Member Forum provides a great platform for you to hear directly from our decision-makers and senior leaders.  

After each session there will be time for questions. I encourage you to participate so that you get the most out of the next two days.  

Independent Review response update 

I would like to share a brief update on AFCA’s response to the Independent Review.  

For those who are not aware, AFCA underwent an Independent Review by Treasury in 2021 – which assessed whether we were meeting our statutory objectives of resolving complaints in a way that is fair, efficient, timely and independent.   

Overall, the report, released in November 2021, was a positive report card for AFCA, and we welcomed the Review’s 14 recommendations.  

Since we last met, there has been a significant amount of work to progress our response to these recommendations.  

Some recommendations are more complex than others. But I am pleased to report that we have already completed work on four recommendations and made progress across all others. 

You can find the full details of this work on the AFCA website.  

Rules Review and consultation 

Our Independent Review response is now focused on our Rules Review project. This will deliver on the recommendations that require Rules and Operational Guideline changes.  

Following a comprehensive review, we have developed a proposed package of Rule and Operational Guideline changes on which we will consult with our stakeholders – including you, our members.    

In addition to responding to the Independent Review recommendations, the proposed amendments include some additional changes to ensure our Rules and guidelines remain accurate, up-to-date and provide clear guidance about our jurisdiction and processes.   

As part of our work in preparing the proposed changes, we engaged an external independent expert – Debra Russell – to assist with drafting them.  

This has helped to ensure the proposed changes are worded clearly and can be understood by all our stakeholders. 

This is the most significant review of AFCA’s Rules and Operational Guidelines since AFCA was established, and we are pleased to be able to consult with you on this over the coming weeks.  

Our Deputy Chief Ombudsman, Dr June Smith, will provide more detail on this work and upcoming consultations – so stay tuned to learn more.   

IT transformation 

AFCA is also undertaking a major IT transformation project this year.  

We know that if we want to improve efficiency and timeliness and ensure your everyday interactions with AFCA are as good as possible, we need world-class technology solutions that are fit for purpose, efficient, modern and user-friendly. 

So, we are launching an updated member portal for financial firms; a new consumer portal for complainants; and a new case management system for our people in FY24.  

This technology will be easier to use, reduce administration, and address pain points and frustrations raised by members at meetings and prior forums. 

Please tune in later today to hear a detailed overview of this IT transformation project and new Member Portal from our Chief Operating Officer, Justin Untersteiner. 

Compensation Scheme of Last Resort 

I’m sure many of you will be aware that the Federal Government last week re-introduced legislation for a Compensation Scheme of Last Resort – known in shorthand as ‘the CSLR’. 

There have been a number of moves to enact legislation for a CSLR, by both the previous Coalition government and the current Labor government.  

The government’s aim now is to have the scheme commence in December 2023. 

It’s proposed that the scheme provide compensation of up to $150,000 to eligible consumers who have an unpaid determination from AFCA, within a prescribed set of financial services. 

AFCA has long supported the introduction of a CSLR in principle, as an important step forward in consumer protection in Australia. 

We believe 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.   

The establishment of a CSLR will support ongoing confidence in the financial system’s dispute resolution framework, of which we are a part. 

That said, the detail of the scope and funding of a CSLR has been a matter for government, so I would point you to the Federal Treasury website if you would like to look more closely at the legislation. 

I can share with you that AFCA has been asked by the government to set up the entity that will operate the CSLR, if and when the legislation is passed by Parliament.  

The CSLR operator will be a subsidiary of AFCA – but I should stress that it will be a separate and independent entity, with its own board, and operating under industry funding arrangements that the government will put in place. 

Separately, in our role as the national ombudsman service, once the legislation is in place we will begin assessing the impact of the CSLR on the more than 4,000 complaints we have had to place on pause because of a firm’s inability to pay. 

For now, we await the parliamentary vote on the legislation. 

Complaint volumes at AFCA 

So as you can see, 2023 is set to be another big year for AFCA. 

It is a year of transformation as we transition to a maturing EDR scheme, cementing our place within the broader financial services industry and the Australian consumer protection framework. 

But it is also a year of change for our members. And we recognise we will be asking a lot from you in an environment where you too are dealing with your own changes and challenges. 

The increase in scam activity is already putting pressure on members who are trying to protect and educate their customers. Addressing scams will not only be a significant investment of your time; it will require financial investment from all of us to find solutions that can minimise their impact.  

Natural disasters and the ongoing impacts of recent flooding across Australia has also added pressure on industry – particularly insurers who are dealing with delays and supply shortages caused by COVID-19 and the war in Ukraine.  

And we know that millions of homeowners will face higher mortgage rates when their fixed term loans expire this year – which too will impact financial firms.  

This is why it is so critical that we all do what we can to proactively address these challenges to support each other and consumers.  

Unfortunately, current complaint volumes suggest that more work needs to be done.  

In this financial year alone, we have already received more than 60,000 complaints – meaning we could reach up to 100,000 complaints by the end of the financial year. 

On average, we are seeing more than 7,500 complaints a month.  

To put this into context, we saw around 6,000 complaints a month in FY22, and a little over 5,800 complaints a month in FY21. 

Initially, a large cohort of these complaints were insurance disputes. However, complaint volumes are now increasing across most product areas, with scams and unauthorised transactions putting pressure on banks and lenders.  

If we look at general insurance complaints in FY23, complaints are up by 64% compared to the same period in FY22.  

In banking and finance, they are up by 19%.  

In superannuation, they are up by 15%, while in investments and advice they are up by 72%. 

And we continue to see more than 400 scam complaints a month.  

This increase in volumes – particularly around delays in insurance claim handling – is severely impacting AFCA’s ability to resolve disputes in an efficient and timely way – with delays in processing and allocating complaints across most product areas. 

However, volumes are not the only cause for delays. We are also seeing a decline in performance by industry to address and resolve complaints before they reach AFCA. 

Fewer complaints are being resolved after referral back to the financial firm, while more members are asking for extensions or not responding to complaints in timeframes outlined in RG271.  

While EDR is an integral part of the dispute resolution process, schemes such as ours were never designed to be the only avenue for redress.  

IDR is the first port of call – and ensures better outcomes for consumers and industry alike.  

We understand the challenging environment. However, we are deeply concerned that firms are not meeting their IDR and EDR obligations – particularly in insurance.  

Now is the time to look at new ways of responding. We ourselves are taking the necessary steps to try and reduce delays by: 

  • investing in technology solutions that speed up parts of our process 
  • actively recruiting and re-assigning staff to high-impact product areas 
  • batching complaints that lend themselves to being resolved by one defined approach; and 
  • regularly communicating with complainants about the progress of their complaint  

But it is important to acknowledge that introducing these solutions comes at a cost not just to AFCA but to our members as well.  

Which is why we strongly encourage members to continue to invest in your own internal dispute resolution processes.  

Members must explore ways to improve the resolution of complaints before they reach AFCA, or in the early stages of our process.   

Early resolution is good for complainants and members, and enables AFCA to prioritise complex or particularly urgent complaints – such as those relating to financial hardship and consumers severely impacted by natural disasters. 

Closing remarks 

That concludes my presentation today. Thank you for your time.  

I now hand over to our Deputy Chief Ombudsman, Dr June Smith, for an update on our Rules Review consultation, and our Chief Operating Officer, Justin Untersteiner, for an overview of our IT transformation project and new Member Portal.  

Thank you.  

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