Australian Financial Complaints Authority: a 'one-stop-shop' for financial dispute resolution

By Andrew Maher
Dispute Resolution Financial Services Financial Services Royal Commission Funds Litigation Superannuation

In brief

Written by Partner Andrew Maher, Associate Ingrid Weinberg and Law Graduate Calypso Strauss

The new Australian Financial Complaints Authority (AFCA) is to replace each of the Superannuation Complaints Tribunal (SCT or Tribunal), the Financial Ombudsman Service (FOS) and the Credit and Investments Ombudsman (CIO) in November 2018.

This development comes in the wake of a governmental review (the Review) into the Australian financial system,1 which found that multiple external dispute-resolution schemes were making it difficult for consistent results to be achieved across similar complaints, and were overcomplicating the pursuit of disputes relating to different kinds of financial firms.2 Additionally, there have been frequent calls for speedier, lower-cost methods of resolving financial disputes, and particularly superannuation complaints, more efficiently and effectively.3

AFCA has been called a 'one-stop-shop' dispute-resolution body for all financial disputes.4 It will be a not-for-profit company governed by a board comprised of an independent chair and equal numbers of directors with industry and consumer backgrounds.5 AFCA will be funded by industry.6 The Honourable Helen Coonan will be appointed its inaugural chair.7

Criticisms of the SCT and establishment of AFCA

For some time, commentators have observed the resolution of superannuation disputes in the SCT has been failing the needs of its participants. The Review listed a series of problems with the SCT, including:

  • its funding arrangements, which were said to suffer from both 'chronic underfunding' and a lack of transparency;8
  • its delay in processing complaints, with an internal operating process that was seen as inflexible, 'inefficient and heavily manual in nature' (e.g. a paper-based file-management system);9
  • an inadequate governance structure that restricts the SCT's ability to make appropriate resourcing decisions and improve internal processes,10 coupled with a framework that does not incorporate a mandate for improving systemic issues, leaving them unresolved;11 and
  • a lack of regulatory oversight or alternative mechanisms for independent review of the SCT and its processes, leaving its current accountability mechanisms 'passive and indirect'.12

In response to those deficiencies, Parliament passed legislation for the creation of AFCA in 2017.13 AFCA is to start accepting complaints on 1 November 2018, at which time the SCT will stop accepting new complaints.14 However, the SCT will determine those complaints that are pending before it beyond AFCA's commencement date. According to the legislation, all financial firms, including superannuation funds, will be required by law to be members of the AFCA scheme15 and AFCA will offer free, fast and binding outcomes (on members only and not complainants) from an independent assessor.16

AFCA's superannuation dispute resolution processes

AFCA will be based on the industry ombudsman model, with additional necessary statutory powers similar to that of a statutory tribunal.17

Like the SCT, AFCA will have all the powers, obligations and discretions conferred upon the original decision maker when making a determination regarding a superannuation complaint.18 These powers will include those necessary for complex superannuation disputes, including:

  • the power to join certain third parties to a superannuation complaint;
  • the power to obtain information and documents that are relevant to a superannuation complaint, and to publish data relating to the internal dispute resolution activities of superannuation firms;
  • the power to require people to attend conciliation conferences to assist in the resolution of a superannuation complaint; and
  • the power to refer a question of law arising in relation to a superannuation complaint to the Federal Court.19

Under the AFCA scheme, there will be no limits on the value of claims that may be made or the value of remedies that may be determined with respect to superannuation complaints.20 The right of appeal to the Federal Court on questions of law in superannuation matters is also maintained,21 as is the requirement to provide written reasons upon the making of a determination.22

Importantly, the AFCA scheme allows a broader range of mechanisms for making a complaint, including via the use of an online form, in writing or by contacting AFCA by telephone,23 with the potential to increase the volume of complaints handled every year. Additionally, AFCA is given the power to investigate potential systemic issues that may affect consumers or small businesses in addition to any complainant.24

Under the new scheme, the Australian Securities and Investments Commission (ASIC) will play a primary role in regulating AFCA, including the issuing of regulatory requirements to ensure compliance with the AFCA scheme;25 the issuing of written directions to ensure sufficient financing;26 and the provision of general directions to AFCA.27

On 1 June 2018, a set of draft proposed rules of AFCA were released by the Minister for Revenue and Financial Services (the Draft Rules).28 These rules were recently closed for public comment and are due for submission to ASIC in August 2018 for final review and approval. AFCA will also produce guidelines setting out in further detail how it will interpret and apply the Draft Rules. These are expected to be available prior to November 2018.29

Membership of AFCA

Superannuation funds will be required to become members of the AFCA by 21 September 2018.30 A membership-application form will be available via the AFCA website from Monday 6 August 2018.31 The AFCA Board has promised to work alongside the SCT and industry bodies to assist in understanding the changes made to dispute-resolution processes. In the meantime, superannuation funds are encouraged to review the proposed Draft Rules and to acquaint themselves with the AFCA scheme, including seeking legal advice as to how the proposed changes might affect them.


  1. Australian Government, Treasury Department, Review of the Financial System External Dispute Resolution and Complaints Framework (2017) (Treasury Report).
  2. Ibid at 8.
  3. Ibid.
  4. AFCA Bill, Second Reading Speech.
  5. AFCA Bill, Schedule 1 (item 2, s 1051(3)).
  6. AFCA Bill, s 1051(2)(b).
  7. Credit and Investments Ombudsman, 'Australian Financial Complaints Authority – AFCA'
  8. Ibid at 94.
  9. Treasury Report at 95.
  10. Ibid.
  11. Ibid at 98.
  12. Ibid at 100.
  13. Treasuring Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 (Cth) (the AFCA Bill).
  14. The Honourable Kelly O'Dwyer MP, 'Putting Consumers First: Australian Financial Complaints Authority Takes Shape' (1 May 2018).
  15. AFCA Bill, Second Reading Speech.
  16. AFCA Bill, Schedule 1, ss 1051(2)(c) and (4)(e).
  17. AFCA Bill, Second Reading Speech.
  18. AFCA Bill Explanatory Memorandum.
  19. Ibid.
  20. AFCA Bill, Schedule 1 (item 2, s 1051(3)(f)).
  21. AFCA Bill Explanatory Memorandum, at [1.36].
  22. AFCA Bill, Schedule 1 (item 2, s 1055A).
  23. See AFCA Draft Rules A.3, 'How a complaint may be submitted to AFCA'.
  24. AFCA Draft Rule 16.
  25. Ibid at s 1052A.
  26. Ibid at s 1052BA.
  27. Ibid at s 1052C.
  28. AFCA, 'Rules of Complaint Resolution Scheme (DRAFT) – June 2018'

  29. Ibid at 7.
  30. Australian Financial Complaints Authority, 'What is AFCA?'
  31. Australian Financial Complaints Authority, 'Apply for membership