Home UpdatesThe Australian Financial Complaints Authority Rules – What You Need To Know

The Australian Financial Complaints Authority Rules – What You Need To Know


On 6 September 2018, we published an update explaining what the Australian Financial Complaints Authority (AFCA) is and what you need to know about it. The AFCA Rules have since been released and have been in effect since 1 November 2018, which is when AFCA started receiving complaints from consumers.

The AFCA Rules consists of five sections. In this article, we summarise the important aspects of each section of the AFCA Rules.

Section A – Complaint Resolution Processes

  • After a complaint has been lodged with AFCA, financial firms cannot initiate or continue legal proceedings or take any action to recover a debt, in relation to any aspect of the subject matter of the complaint, without AFCA’s consent (Rule A.7).
  • AFCA has the power to compel production of a broad range of information in order to assist it with considering a complaint. Failure to provide information to AFCA may result in an adverse inference being drawn against the non-compliant party, or AFCA suspending consideration of the complaint (Rule A.9). For superannuation complaints, failure to comply with a written notice to provide information to AFCA is an offence which attracts a penalty of $6,300 (ss 1054A and 1054B Corporations Act 2001 (Cth)).
  • Determinations of complaints other than superannuation complaints are binding upon the parties if the complainant accepts the determination within 30 days of receipt. In such cases, the financial firm may seek from the complainant a binding release from any further liability in relation to the complaint. If the determination is not accepted by the complainant, the determination is not binding on them and they can take any other action available to them, including bringing an action in the courts, against the financial firm (Rule A.15).
  • Determinations of superannuation complaints can be appealed to the Federal Court on questions of law only (s 1057 Corporations Act 2001 (Cth)). Financial firms have no rights of appeal in relation to determinations of complaints other than superannuation complaints.

Section B – Requirements 

  • A complaint made to AFCA must have a sufficient connection with Australia (Rule B.3). For example, a complaint must arise from a contract or obligation arising under Australia law (Rule B.3.1(a)).
  • Various time limits apply to different types of complaints (Rule B.4). For example, a complaint relating to the payment of a death benefit must be submitted to AFCA within 28 days of notice of the final decision, provided the complainant objected to the proposed decision within 28 days of receipt (Rule B.4.1.3).
  • In relation to some types of complaints, AFCA has a discretion to extend the time limits to make a complaint (Rule B.4.4).

Section C – Exclusions

  • Certain types of complaints cannot be made to AFCA, unless all parties, including AFCA, agree to allow AFCA to deal with the complaint (Rule C.1). Examples of excluded complaints include:
    • a complaint about the allocation of the benefit of a financial service between beneficiaries, unless the complaint relates to a superannuation complaint or a traditional trustee company service; and
    • a complaint about a financial firm’s assessment of credit risk or the security required for a loan, unless the complaint is about maladministration in lending, loan management or security matters or the variation of a credit contract as a result of financial hardship.
  • AFCA has a discretion to exclude any complaint, which will only be exercised if there are compelling reasons to do so (Rule C.2).

Section D – Remedies

  • There is no limit on the amount claimed and on the amount of compensation which can be awarded for superannuation complaints (Rule D.1).
  • For complaints other than superannuation complaints, the AFCA Rules stipulate a maximum total amount which may be awarded (Rule D.4). For example:
    • for claims against a general insurance broker, the amount claimed must not exceed $1 million and the maximum compensation that may be awarded is $250,000; and
    • for claims arising from a credit facility provided to a small business (meaning a business with less than 100 employees), the credit facility must not exceed $5 million and the maximum compensation that may be awarded is $1 million.
  • Where the amount claimed is greater than the limit stipulated in the AFCA Rules, AFCA cannot deal with the matter and it must instead be dealt with by an appropriate court or other dispute resolution body (Rule D.4).
  • The remedies which AFCA can award include:
    • the payment of a sum of money;
    • the forgiveness or variation of a debt; and
    • the variation or setting aside of a contract (Rule D.2).
  • For complaints other than superannuation complaints, AFCA has a power to require the financial firm to contribute to the complainant’s costs incurred in the course of the complaint, in most cases up to a limit of $5,000 (Rule D.5).

Section E – Defined Terms 

  • A “Small Business” is defined as a business with less than 100 employees (up from the conventional 20 employees) at the time of the act or omission by the financial firm that gave rise to a complaint (Rule E.1). This increase will now enable most medium-sized businesses (generally 20-199 employees) to make complaints in relation to financial services and products.

AFCA has published Operational Guidelines to the Rules, which explain how AFCA will interpret and apply the AFCA Rules and are to be read in conjunction with them.

If you are considering making a complaint to AFCA personally or on behalf of your business, or if you need to defend an AFCA complaint, and you wish to seek legal advice, please contact Tom Darbyshire or Jonathan O’Connor on (08) 9321 3755.

The information published in this paper is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.