Australia: The Australian Financial Complaints Authority (AFCA): An overview

Businesses involved in the provision of financial services are being urged to ensure they understand new obligations stemming from the launch of the Australian Financial Complaints Authority (AFCA) on 1 November 2018.

AFCA has been designed as a 'one-stop-shop', tasked by the Commonwealth Government with providing fast, free and binding external dispute resolution services for consumers of financial products.

Organisations affected by the new body need to ensure they become members of AFCA by 21 September 2018.

Membership of AFCA will be mandatory under law for the following providers of financial services:

  • Australian Financial Service Licensees;
  • Australian Credit Licensees;
  • regulated superannuation funds (except self-managed super funds);
  • approved deposit funds;
  • retirements savings account providers;
  • annuity providers; and
  • life policy funds and insurers.


Financial services providers who are required to become AFCA membership need to ensure they register by 21 September 2018. Providers must apply for membership through AFCA's website, and pay a nomination fee.

Current Licensee Members of the Credit & Investments Ombudsman (CIO) will need to retain their membership of the CIO, while also becoming members of the AFCA. This follows a Memorandum of Understanding between the CIO and AFCA.


AFCA is being established by the Commonwealth Government following the Review of the financial system external dispute resolution and complaints framework, better known as the Ramsay Review.

The Ramsay Review recommended:

  • the establishment of a single external dispute resolution body for all financial disputes to replace the FOS, CIO and SCT; and
  • improved access to dispute resolution services for individuals and small businesses, with a new organisation able to investigate complaints relating to matters with a monetary limit of $1 million and grant compensation of up to $500,000.

The Parliament passed legislation facilitating these recommendations in early 2018.


AFCA replaces three existing dispute resolution agencies:

  • the Financial Ombudsman Service (FOS);
  • the Credit and Investments Ombudsman (CIO); and
  • the Superannuation Complaints Tribunal (SCT), who were previously responsible for dispute resolution services in the financial services industry.


Consumers and small businesses with less than 100 employees will be able to make complaints to AFCA. The authority can hear complaints regarding matters of up to a $1 million value, and order compensation of up to $500,000.


AFCA will be governed by rules contained within the authority's Terms of Reference.

Draft rules were opened for public consultation and have now closed. The final rules are expected to be published by September 2018 once approval has been granted by the Australian Securities and Investments Commission (ASIC).

The organisation will also have an independent assessor to deal with complaints about its handling of disputes.

AFCA will be required to refer serious complaints, including serious contravention of law by financial firms or systemic issues to appropriate authorities such as ASIC, APRA and the Commission of Taxation.1

Determinations relating to superannuation complaints will be binding.2 The draft guidelines provide that determinations relating to non-superannuation complaints will require the consumer to accept the decision before it becomes binding. Claimants will still retain a right to challenge the decision of AFCA and have their matter determined in court.3


AFCA will be operated as a not-for-profit company, limited by guarantee authorised by the Minister for Revenue and Financial Services.

The Commonwealth Government has appointed former Assistant Treasurer and Minister for Revenue Helen Coonan as the inaugural Chair of AFCA. Further information on additional board appointments can be found here.

ASIC will be responsible for overseeing AFCA, and approving any significant changes to the operation of the agency.


AFCA will be funded by contributions from members.

Licensee Members will be required to pay a base levy fee each quarter during the following year. Future levies will be based on the size of the applicant's business. Estimates of future base levies can be made using this calculator set up by AFCA. Credit representatives will also pay a $55 application fee.

AFCA has also been granted $1.7 million in transitional funding to cover governance-related costs. Confirmation of the final funding model will be released in early September 2018.


Organisations who are members of AFCA are responsible for ensuring their customers are aware complaints can be made to and resolved by AFCA.4 Members must ensure they include AFCA's contact details in Financial Services Guides, Credit Guides and disclosure documentation by 1 July 2019.


Organisations who are required to become AFCA members need to ensure they:

  • are signed up as Members of AFCA by 21 September 2018;
  • familiarise themselves with the authority's final rules once they are released in September 2018; and
  • inform their customers about AFCA's role in resolving complaints.


1s1052E of Corporations Act

2 s1055D of the Corporations Act 2001 (Cth)

3 ASIC Draft Regulatory Guide 139 published 5 March 2018, at p35

4 ASIC Regulatory Guide 165

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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