AFCA adopts case merit assessments

The Australian Financial Complaints Authority will permanently adopt a merit assessment process, so that complaints where no error or financial loss has occurred can be identified and excluded quickly.

AFCA conducted a three-month pilot program last year during which complaints were subjected to a merit assessment during the initial case management stage. Where they were found to be without merit, meaning there was no error and or financial loss, they were excluded under AFCA's rules.

AFCA found that it took half the time to resolve these cases and the fees charged were as much as 75% lower than comparable cases.

AFCA will now adopt the process permanently, to be applied to the kinds of cases tested during the pilot program. These cases will be those where there is sufficient information about the complaint and it clearly shows no error or loss. More complex complaints will still be investigated in full, AFCA said.

Sponsored by Praemium Find out how managed accounts enhance practice success

"Our pilot was in direct response to feedback from members that the cost of paying for some determinations - the final, formal decision-making stage of our process - can outweigh the value of the initial service or product that was provided," AFCA chief operating officer Justin Untersteiner said.

"Firms told us this meant they sometimes made a commercial decision to concede the complaint on the basis of cost, regardless of the merits of the case."

The issue was made worse by the conduct of a small number of third-party paid representatives using questionable tactics, with complainants refusing to consider a reasonable resolution in the earlier stages of the process, he added.

Untersteiner said the decision is part of AFCA's work to ensure poor conduct by paid advocates is addressed and that organisations are not deterred from defending complaints due to cost.