The Australian Financial Complaints Authority (AFCA) is the financial services ombudsman where you can lodge a complaint about the conduct of a financial services provider. AFCA has the ability to hear complaints about:
- superannuation funds;
- insurers that provide insurance benefits held in super, like total and permanent disability (TPD) insurance and income protection insurance; and
- insurers that provide general insurance, for example, home and contents insurance.
AFCA also has the ability to hear complaints about other financial service providers, but this blog will focus on the above.
AFCA is an alternative to the Court process. The decision-makers are external to the super fund or insurer. They are not judges but are usually legally trained.
The AFCA complaints process
The AFCA process varies according to the complaint which is being decided, however, it usually involves:
- A telephone conciliation
A telephone meeting of all of the parties where each of the parties can speak and talk about what they want help with and set out what they think would be a fair resolution to the complaint.
- A recommendation
A preliminary decision of an AFCA case manager is not binding on any of the parties but, if accepted by all of the parties, can be a resolution to the complaint.
- A determination
A final decision by an ombudsman or panel (comprising an ombudsman and other consumer and/or industry representatives) which, if accepted by the complainant, binds the super fund or insurer.
Importantly, if you complain to AFCA and do not get a decision that you want and do not accept the decisions made at recommendation or determination, you retain the right to take your complaint to a Court. If you are considering taking your complaint to the Court, you should seek legal advice.
Important considerations before making a complaint to AFCA
Have you already made a complaint to the insurer or super fund directly?
All super funds and insurers (indeed almost all financial services companies) are required to have an internal dispute resolution (IDR) or complaints process. For super funds, this is a requirement under the Superannuation (Industry Supervision) Act and for insurers, the requirement arises from ASIC rules and regulations.
Complaints to a super fund or insurer’s internal dispute resolution team are usually handled by someone other than the person who has been handling your claim or is responsible for the conduct or decision that you are complaining about (but not always). Engaging in the IDR process can be a very useful way of working out issues that you are having with your super fund or insurer.
Under the AFCA rules, it is a requirement that you have lodged a complaint with the insurer or super fund directly before AFCA will handle your complaint. However, usually if you complain to AFCA before you lodge an IDR complaint, AFCA will simply allow the insurer or super fund more time to consider and respond to your AFCA complaint.
Does AFCA have jurisdiction to handle your complaint?
Importantly, AFCA does have some limitations on the claims which it can hear about the decisions of super funds and insurers. These limitations are about:
- the time since the decision or conduct that you want to complain about and the time you bring your complaint (time limit issues); and
- the amount of the claim that you are making (i.e., the amount of the insurance benefit you are claiming). AFCA has a limit on both the value of the claim and the amount of compensation they can order.
All of the jurisdictional limits are set out in the AFCA rules, and some of the jurisdictional limits change annually.
Also, AFCA can hear complaints about most super funds, insurers and other financial service providers. You can search on the AFCA website to check if a company is an AFCA member that you can complain about to AFCA. Most are covered because it is a requirement of being a super fund or insurer that you are an AFCA member, but there are some limited exceptions.
For more information about caps and limits, visit the AFCA website here or call us for confirmation.
Is AFCA the best place to hear your complaint, or is it better handled in Court?
There are a number of factors that need to be considered when working out if your complaint is best dealt with by AFCA or in Court. We can’t cover all of the relevant considerations in this blog, and every complaint must be considered on its merits. Below are some relevant considerations when deciding whether or not you’re your superannuation disability insurance or general insurance complaint to AFCA.
AFCA does not have oral hearings
This means that it makes its decision based on written statements, reports and written submissions. We sometimes say that its decisions are made “on the papers”.
If your case is best presented by people making oral submissions (think Perry Mason or Rumpole of the Bailey on their feet convincing a jury), AFCA is not the forum for you. However, if your complaint can be well presented with good and reasoned written submissions and detailed expert opinions or statutory declarations, AFCA may work out OK.
These considerations will turn predominantly on whether you are able to get expert evidence to support your case from builders, engineers, doctors (for disability insurance claims like TPD and income protection) or other experts who are convincing and deal with the arguments made by the insurer or super fund.
AFCA is consumer-friendly
This means AFCA is designed to be a process that ordinary people can complain to without the need for legal representation. In some cases, it works well in this way, and people can get good outcomes without the need to engage lawyers.
However, you can get a lawyer to represent you at AFCA if you choose and, depending on the complaint, by engaging a lawyer, you make sure that your case is put in the strongest way.
AFCA is cost-neutral
This means that if you take your complaint to AFCA and you lose, you will not be required to pay any money to the insurer or super fund for their costs of responding to your complaint. This also means that if you run your claim and win, you will not be awarded any amount for your legal costs or time and effort of making the complaint.
A significant difference between going through the Court system versus making your complaint to AFCA is that if you decide to complain about your super fund or insurer in Court and you lose, you will usually be ordered to make a substantial contribution to the legal and other costs which the insurer or super fund has incurred in defending your Court claim.
Some AFCA decision-makers are better than others
If your matter runs to a determination (a final AFCA decision that is binding on all parties; you, the super fund or the insurer), the final decision-maker will either be one person (an ombudsman) or a panel of 3 to 4 people (comprised of an ombudsman and some industry and consumer people).
The decisions made by different ombudsmen and industry/consumer representatives can vary significantly, and you do not decide which decision-maker will review your complaint.
Get help from an insurance lawyer
AFCA is a decision-making body that can be very helpful to you if you have complaints about decisions made on your case or if you do not agree with the final decision made on your case.
We help lots of people with AFCA complaints about super funds and insurance companies, and we would be happy to have a free and confidential chat with you about your current or possible AFCA complaint if you are looking for some guidance.
Contacting Berrill & Watson
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