What Is AFCA? Australia's Financial Complaints Authority Explained

If you have a dispute with an Australian financial institution — including an insurer — and can't resolve it internally, the Australian Financial Complaints Authority (AFCA) is your most important free resource. Understanding how AFCA works, what it can do, and how to use it effectively is essential knowledge for any Australian dealing with a denied insurance claim.

What Is AFCA?

The Australian Financial Complaints Authority (AFCA) is an independent, not-for-profit organisation that provides free dispute resolution services to consumers and small businesses who have disputes with financial firms.

AFCA was established on 1 November 2018, replacing three separate dispute resolution bodies:

• The Financial Ombudsman Service (FOS Australia)
• The Credit and Investments Ombudsman (CIO)
• The Superannuation Complaints Tribunal (SCT)

All financial services licensees — including every insurance company operating in Australia — are required by law to be AFCA members. This is mandated by the Corporations Act 2001 and the National Consumer Credit Protection Act 2009 as a condition of holding an Australian Financial Services (AFS) licence.

AFCA is approved by ASIC (Australian Securities and Investments Commission) as Australia's external dispute resolution (EDR) scheme.

What Does AFCA Cover?

AFCA handles complaints about:

Insurance:

• Home and contents insurance
• Motor vehicle insurance
• Travel insurance
• Life insurance (death, disability, income protection)
• Health insurance (private health)
• Business insurance (for eligible small businesses)
• Consumer credit insurance
• Flood, fire, and natural disaster insurance
• Personal accident insurance

Banking:

• Transaction accounts and banking services
• Credit cards and loans
• Mortgage disputes

Financial advice:

• Poor or inappropriate financial advice
• Managed investments

Superannuation:

• Superannuation fund disputes
• Death benefit payments
• Disability payouts from super funds

For this guide, we focus on insurance disputes, which represent a significant and growing portion of AFCA's caseload.

What AFCA Cannot Do

AFCA's jurisdiction has limits:

• Disputes above its monetary limits (see below)
• Complaints about premium pricing (AFCA cannot order an insurer to lower premiums)
• Disputes already before a court
• Complaints about government decisions or regulators
• Disputes where AFCA determines it would not be fair and reasonable to consider the complaint given the circumstances

AFCA's Monetary Limits for Insurance

AFCA can consider insurance disputes up to:

• $1,085,000 for disputes about insurance claims (indexed annually)
• $7,500 for non-financial loss (distress and inconvenience)
• Additional amounts for consequential losses in certain circumstances

These limits are reviewed annually. They are among the most generous of any ombudsman scheme globally, covering the vast majority of consumer insurance disputes.

How the AFCA Process Works

Phase 1: Internal Dispute Resolution (IDR)

Before AFCA can accept your complaint, you must first attempt to resolve it with the insurer through their internal dispute resolution process. Under ASIC's Regulatory Guide 271 (RG 271), insurers must:

• Acknowledge your complaint within 5 business days
• Resolve your complaint within 30 calendar days for most complaints
• Provide a final IDR response explaining their decision

If you are not satisfied with the insurer's IDR response, or if 30 days pass without a response, you can go to AFCA.

Exception: If you are in financial hardship or there is an urgent health or safety issue, you can approach AFCA immediately without waiting 30 days.

Phase 2: Lodging with AFCA

File your complaint at afca.org.au or:

• By phone: 1800 931 678 (free call)
• By email: info@afca.org.au
• By post: GPO Box 3, Melbourne VIC 3001

AFCA will ask you to provide:

• Your contact details and those of the financial firm
• A description of the complaint
• What outcome you are seeking
• Supporting documents (upload copies of your policy, denial letter, correspondence, and evidence)

Phase 3: Registration and Assessment

AFCA registers your complaint and assesses whether it falls within their jurisdiction. You'll receive an acknowledgement with a reference number.

Phase 4: Referral

AFCA contacts the insurer and refers the complaint, giving them an opportunity to resolve the dispute directly with you. Many complaints are resolved at this stage — AFCA data shows approximately 70% of insurance complaints are closed at the registration and referral stage, often within 30 to 60 days.

This early resolution happens because:

• Many insurers prefer to settle rather than go through formal AFCA process
• The insurer may recognise the weakness in their position once a formal complaint is filed
• AFCA provides a neutral framing of the dispute that sometimes breaks a deadlock

Phase 5: Case Management

If the complaint isn't resolved at referral, AFCA assigns a case manager. The case manager:

• Reviews all documents from both parties
• May request additional information
• Assesses the key issues in dispute
• May issue a preliminary assessment of the likely outcome

Both parties can respond to the preliminary assessment. Many disputes settle at this stage once the parties have a clearer indication of where the case is heading.

Phase 6: Determination

If the case isn't resolved after case management, AFCA issues a formal determination. This is a written decision that:

• Sets out the facts of the dispute
• Applies the relevant law and AFCA's approach
• States the outcome
• Is binding on the financial firm if the complainant accepts it
• Is not binding on the complainant — you can reject it and still go to court

The insurer must implement the determination within the timeframe specified (usually 30 days).

What Can AFCA Award?

AFCA can:

• Order payment of a claim: If AFCA finds the insurer wrongly denied your claim, they can order payment up to the applicable monetary limit
• Order reinstatement of a policy: If a policy was wrongly cancelled, AFCA can order reinstatement
• Award non-financial loss compensation: Up to $7,500 for stress, inconvenience, and anxiety caused by the insurer's conduct (this is in addition to the claim payment)
• Award consequential losses: Financial losses you suffered as a result of the denied claim (e.g., you had to pay out of pocket for a treatment the insurer should have covered)
• Order the insurer to take action: Such as providing information, conducting a proper investigation, or correcting records
• Issue non-binding recommendations: On issues outside their determination power

AFCA applies a standard of what is "fair and reasonable in all the circumstances" — they are not bound to rule strictly on policy terms if a strict reading would produce an unfair result.

The "Fair and Reasonable" Standard

One of AFCA's most important features is that its decisions are based on what is fair and reasonable, not just on the strict legal interpretation of the policy. This means:

• AFCA can take into account the overall conduct of the insurer
• AFCA can consider whether an exclusion was fairly applied given the policyholder's circumstances
• AFCA can consider industry standards and what a reasonable insurer would do
• AFCA can override a technically correct policy interpretation if applying it would be unfair

This is a significantly more consumer-friendly standard than a court applying pure contract law.

Key Laws and Principles AFCA Applies

Insurance Contracts Act 1984 (ICA): The primary legislation governing general insurance in Australia. Key provisions AFCA applies include:

• Section 54: Cannot deny a claim for a breach that didn't cause or contribute to the loss
• Section 13: Duty of utmost good faith — both parties must act in good faith
• Section 35: Limitations on insurer's ability to deny claims based on pre-existing conditions in health insurance

Australian Consumer Law: Prohibition on misleading and deceptive conduct, consumer guarantees

ASIC Act: Prohibition on unconscionable conduct in financial services

How Long Does AFCA Take?

AFCA's 2023-24 annual report data indicates:

• Referral and registration stage: Most cases close within 30 to 60 days
• Case management stage: 2 to 4 months
• Determination stage: 1 to 3 months additional
• Complex cases: Up to 12 months or more

AFCA has published service standards requiring 80% of complaints to be resolved within 60 days at the registration and referral stage.

Preparing a Strong AFCA Complaint

1. Be specific: Reference exact policy clauses and the specific facts the insurer relied on
2. Attach everything: Policy PDS, schedule, denial letter, internal complaint, insurer's IDR response, all evidence
3. Reference section 54 where relevant: For act/omission-based denials in general insurance
4. Get expert evidence: Medical reports, engineering assessments, independent valuations
5. Explain consequential losses: If you paid out of pocket for something the insurer should have covered, document this
6. State the fair and reasonable standard: AFCA goes beyond strict contract law — frame your case in terms of what a fair outcome would look like

AFCA vs. Going to Court

Factor	AFCA	Court
Cost to consumer	Free	Significant fees
Time	2-6 months typical	1-3 years
Limit	$1,085,000	No limit
Standard	Fair and reasonable	Strict contract law
Legal representation	Usually not required	Usually required

For disputes under $1,085,000, AFCA is the right starting point for almost all consumers.

Getting Help

ClaimBack (claimback.app) helps Australians prepare professional AFCA complaints and internal appeal letters. The free tool generates structured, regulation-referenced documents tailored to Australian insurance law and the specific denial type — helping you make the strongest case at every stage.

Summary

• AFCA is Australia's government-approved, free external dispute resolution scheme for financial services
• All Australian insurers must be AFCA members
• Covers insurance disputes up to $1,085,000 — free for consumers
• Most complaints resolved at the referral stage (within 30-60 days) before formal proceedings
• Decisions are binding on insurers (if the consumer accepts)
• Applies a "fair and reasonable" standard, not just strict contract law
• Exhaust IDR first (30 days), then file at afca.org.au or call 1800 931 678