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Delivering a fair outcome for all

31 Mar 2023

Interview with David Locke, AFCA’s Chief Ombudsman and Chief Executive Officer

Having an issue with a financial firm, service or product can be a daunting prospect for consumers and small businesses. What if a satisfactory outcome through the firm’s dispute resolution service can’t be reached and you need free, impartial and independent advice? Here we talk to Australian Financial Complaints Authority Chief Ombudsman and CEO David Locke about ways the authority can help, how complaints are handled, and why its services are important to Australian consumers.


Why was the Australian Financial Complaints Authority (AFCA) created?

AFCA was established in response to the 2017 Ramsay Review, the first comprehensive review of the financial system’s EDR framework. The three-member panel, led by Professor Ian Ramsay, proposed a one-stop shop to handle all financial disputes, replacing three separate dispute resolution bodies – the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT).

The panel found that having multiple EDR schemes meant it was difficult to achieve comparable outcomes for consumers with similar complaints, and there was an increased risk of consumer confusion and complaints falling through the gaps.


What types of complaints does AFCA handle?

Banking and finance; general and life insurance; investments and financial advice; and superannuation. We try to help resolve complaints through informal methods but if we can’t help parties come to an agreement, one of our ombudsmen, or a panel of decision makers, will decide an appropriate outcome. We’re an impartial and independent not-for-profit company that offers ombudsman services under the authorisation of the Federal Government and the oversight of the Australian Securities and Investments Commission (ASIC). We also have a systemic issues function which identifies where there may be issues that are impacting a whole class of consumers or there are potentially serious contraventions of the law.


At what stage in the complaints process can AFCA become involved?

Individuals and small businesses (classified as those with less than 100 employees) can use our service if they have sought resolution of a complaint through their financial firm’s internal dispute resolution process. Firms generally have 30 days to address a complaint internally (or 45 days for superannuation trustees).  If that timeline isn’t met, or the complainant doesn’t agree with the outcome of that internal process, they can then come to AFCA.


What are the golden rules for efficient complaint handling?

Complaints are often about people and relationships. I think that’s at the “core” of fair, effective and efficient complaint handling. Good relationships based on mutual trust and respect result in issues being communicated and resolved early, but when communication breaks down, things can quickly get messy. Complaint resolution works well when the human behind the complaint is considered and the customer is seen as a valuable asset.


What are some of the ways in which AFCA is resolving complaints for consumers?

We first try to resolve a complaint via informal methods through negotiation or conciliation before moving to more formal methods. We might provide a “preliminary assessment” addressing the merits of a complaint which sometimes sees the parties involved come to an agreement. If not, the next step is a formal decision, also known as a determination. Those formal decisions are binding on the financial firm if the consumer accepts the decision. Consumers, however, retain the right to reject the decision and to pursue their complaint elsewhere – through a court, for example. (The exception is superannuation complaints, where any determination we make is binding on both parties.)


What are some potential outcomes?

AFCA can award compensation for losses suffered because of a firm’s error or inappropriate conduct. Interest or fees can be waived, a debt forgiven, or the amendment or setting aside of a contract, among other things.  We’re proud that in the past financial year 93% of complaints were closed by AFCA without requiring a formal decision. That’s a good result for both consumers and firms.


How important is AFCA to consumers and small businesses?

AFCA plays a critical role in providing consumers and small businesses with access to a binding, out-of-court dispute resolution service. The alternative would be potentially costly and lengthy legal proceedings that create stress and anxiety for consumers and small businesses.

Financial firms also benefit from AFCA’s dispute resolution service as an alternative to a court or tribunal process.


How efficient is AFCA?

Last financial year we closed more than 71,000 complaints, taking the total since we opened our doors in 2018 to more than 320,000. Consumers have received over $981 million in compensation as a result of AFCA’s work so far. In the 2021-22 financial year, the average time to close a complaint at AFCA was just 72 days and about 60% were closed within 60 days. As a 2021 Independent Review of AFCA, led by the Federal Treasury noted, having an accessible and efficient ombudsman service promotes efficiency in the financial system overall. Consumers, small businesses and financial firms can participate in the financial system with confidence that a robust process is in place in the event of a dispute.


David is AFCA’s Chief Ombudsman and Chief Executive Officer, and he leads the organisation. This includes representing AFCA with key stakeholders, leading AFCA’s people and having overall responsibility for delivering AFCA’s services and implementing their strategy.

He started his career as a solicitor and worked in the private, government and not-for-profit sectors including 10 years in community legal centres in London and a similar period at the Charity Commission for England and Wales. David moved to Australia in 2011 to help establish the Australian Charities and Not-for-Profits Commission (ACNC). Those experiences led to his appointment in June 2018 as AFCA’s first CEO and Chief Ombudsman.



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