Australia: A new era for financial services dispute resolution - AFCA


Treasury's recently concluded consultation paper (Paper) has now provided further insight into how the AFCA scheme may operate. The Paper confirms that much of the operational details will be set out in guidelines and other informational material to be issued and updated by AFCA itself, foregoing the need for ASIC approval unless there is a material amendment.1

Here are some of the key features of AFCA:

  • Organisational requirements – All financial and credit service providers will be forced to become a member of the AFCA scheme. A 'user pays' model is under consideration as it may incentivise members to avoid or otherwise settle disputes.
  • Operator requirements – AFCA will be subject to regular independent reviews and will be operated by a not-for-profit company limited by guarantee.
  • Operational requirements – Complaints brought before the AFCA must be resolved in a fair, efficient and timely manner with appropriate expertise. The Law Council of Australia recommends more specialist than generalist decision-makers by selecting candidates based on their skill-sets and whether they demonstrate the requisite knowledge and expertise in the particular industry segment.
  • Compliance requirements – The scheme operator must comply with conditions, regulatory requirements and directions from ASIC about how the scheme operates. Any material changes will also be subject to ASIC's approval.
  • Decisions of the AFCA will not be amenable to judicial review, other than an appeal to the Federal Court on questions of law.


Key stakeholder groups in the superannuation industry have argued that whilst the Bill seeks to retain much of the processes under the Superannuation (Resolution of Complaints) Act 1993 (Cth) (SRC Act), they have raised concerns such as the following:

  • Section 14(6) of the SRC Act removes from the SCT's jurisdiction decisions by trustees that relate to management of the fund as a whole. This restriction is not replicated in the Bill and may result in an unwarranted extension of the AFCA's powers to interfere with the trustee's duties, including its discretion about the appropriate investment policy for the fund.2
  • Statutory time limits that apply under the SRC Act in relation to total and permanent disability claims are left out of the proposed amendments. These provisions ensure that there is minimal delay and improves the evidence-gathering process for members when submitting their claim.
  • The Bill insulates 'decisions making or forming part of the process of making a decision under the AFCA scheme' from judicial review.3 If the AFCA decided to exclude the complainant's matter from its jurisdiction, there should be a means for the aggrieved party to seek judicial review of the exclusion decision.

Other general comments include:

  • whether a trustee will be allowed to reconsider its decision, before the complaint proceeds to the AFCA;4
  • the tribunal-based structure of the SCT has been successful and should be retained, particularly as the major problem with the SCT was its chronic underfunding, as opposed to other endemic issues. The SCT has also raised concerns that it lacks sufficient funding to resolve its current case load by 30 June 2020 to allow for the government's proposed transition to the new scheme;5 and
  • that a panel of decision-makers may be required to deal with complex complaints. This allows for more robust analysis and consideration of the issues at stake.


The Government continues to look at how it can simplify the transition of matters from the SCT to the AFCA – including identifying when a claim can be characterised as having been 'dealt with' by the SCT and therefore excluded from being brought before the AFCA.

From the submissions received during the recent consultation process, it appears the government-appointment transition team will review and provide advice to the Minister on what the draft terms of reference, company constitution of the AFCA operator, and proposed funding model should cover. The Minister will then select a company to be the scheme operator if they demonstrate the ability to deliver 'fast and fair resolution of financial complaints in a way that is binding on Financial Firms.'6

Following this, all providers of financial and credit services will need to become members and pay the associated fees by the anticipated commencement date of 1 July 2018.7


1 Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017, proposed s 1052D.

2 Employers First v Tolhurst Capital Ltd (2003) 143 FCR 356 [74].

3 Item 11 of the Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill 2017 proposes to insert a new paragraph (hba) into Schedule 1 ('Classes of decisions that are not decisions to which this Act applies') of the Administrative Decisions (Judicial Review) Act 1977 (Cth).

4 Under section 19 of the Superannuation (Resolution of Complaints) Act 1993 (Cth), the SCT will only deal with complaints that have been reconsidered by the trustee.

5 Submission 14 from the Superannuation Complaints Tribunal, dated 29 September 2017, p. 8.

6 Explanatory Memorandum, Treasury Laws Amendment (Putting Consumers First—Establishment of the Australian Financial Complaints Authority) Bill 2017 para 1.3-1.4.

7 Speech by the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer, to the AFA 2017 National Adviser Conference, 13 October 2017.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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