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AFCA commits to user-pays funding model

by snichols10 minute read
AFCA commits to user-pays funding model

In the wake of 60 meetings with industry bodies and members, the ombudsman’s board has agreed to a funding model based on usage.

The Australian Financial Complaints Authority (AFCA) first signalled its intention to pivot to the new model earlier this year, opening an industry consultation on the user-pays funding model in March

Under the model, which comes into effect 1 July, members who are “heavy users” will pay more for their membership once they pass a threshold amount, while firms who receive few or no complaints will pay less. 

AFCA has said that the vast majority of its members will be those seeing a decrease in costs under this new model, noting that roughly 90 per cent “will see a positive or neutral impact on total fees”. 


The remaining 10 per cent are expected to face a lift in cost that AFCA describes will “more accurately and fairly” reflect their usage.

Further, the ombudsman said that 95 per cent of its licensed financial firm members will only pay their annual registration fee, which has been set at $375.55 for the 2023 financial year. 

The vast majority (99.9 per cent) of authorised credit representatives are expected to pay an annual registration fee of $65.98. 

This user-pays model will also see an abolishment of the superannuation levy, alongside super funds being brought under the same fee structure as other scheme members. 

There will also be no fee being payable for complaints found upon initial assessment to be outside AFCA’s jurisdiction. 

AFCA has said that this new model will also minimise the “cross-subsidisation across sectors” by considering both the volume of complaints registered for a firm along with the time taken to resolve them.

AFCA chief ombudsman and chief executive officer, David Locke, said that members have welcomed the fact that the model “rewards good complaints resolution performance: and “that it apportions fees fairly” based on the use of the authority’s services.

“This is a fair, transparent and equitable funding model,” Mr Locke added. 

“Ultimately, firms have control over the fees they pay by taking a resolution mindset when managing complaints.”

Mr Locke added that the ombudsman will monitor the performance of the new model over the coming year, including ensuring positive, fair and equitable member and complainant resolution behaviours were occurring. 

“Our user-pays approach incentivises firms to use internal dispute resolution to decrease complaints to AFCA,” he said. 

“At AFCA, we believe our role isn’t just to resolve complaints escalated to us but also to play a preventative role.”

[Related: AFCA promises slashed costs in proposed funding model]

david locke new  ta



Sam Nichols is a journalist at The Adviser and Mortgage Business.


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