Last updated 14 January 2019
All credit providers are required to provide free independent dispute resolution to consumers. All complaints are directed to the Australian Financial Complaints Authority.
Role of the Australian Financial Complaints Authority
The Australian Financial Complaints Authority (AFCA) has replaced all other external dispute resolution schemes, and all Australian financial services licensees, Australian credit licensees, authorised credit representatives and superannuation trustees are required to be a member of AFCA.
Consumers can lodge disputes with AFCA free of charge. The consumer will not have to pay the lender’s cost of responding to the dispute even if they are unsuccessful.
AFCA will review the dispute and make a decision based on the law, industry codes of practice, best industry practice, its rules (terms of reference) and what is fair and reasonable in all the circumstances. Resolving the complaint may happen by negotiation, conciliation, recommendation or a determination made by AFCA.
AFCA is free, and its decision making is regulated by the law and independent of its lender members.
AFCA has jurisdictional limits, and the first assessment when a dispute is lodged is to establish if the case can be considered under its rules or terms of reference.
While the dispute is being considered by AFCA, the lender must not proceed with legal proceedings.
If the consumer does not agree with the decision by AFCA, they are free to take the case to court, however, the lender is contractually bound to accept the decision made by AFCA.
In most cases it is too late to lodge a dispute after a court judgment is obtained, but the consumer can lodge a dispute if they have been served with a statement of claim and have not yet filed a defence.