AFCA to invoice insurers this month under new fee model

6 June 2022

The Australian Financial Complaints Authority (AFCA) will issue invoices to insurers and other users of the dispute resolution service this month as its new “user pays” fee structure kicks in.

AFCA says the new funding model is more transparent with simple fee calculations, and will apply to all complaints closed from July 1. It includes a single annual registration fee of $375.55 for all financial firm members and $65.98 for authorised credit representative members. All members qualify for five free complaints a year.

Heavy users will now pay their fair share, minimising “cross-subsidisation” across sectors by considering both the volume of complaints for each firm and time taken to resolve them. 10% of overall users are expected to pay more as the new model more accurately and fairly reflects their usage.

Chief Ombudsman and CEO David Locke says AFCA aims to play a preventative role and the user-pays model encourages firms to use their own internal dispute resolutions.

“The feedback we received was overwhelmingly positive,” Mr Locke said. “Ultimately, firms have control over the fees they pay by taking a resolution mindset when managing complaints.”

AFCA has estimated 8% of insurance members will experience an increase in annual fees due to higher relative complaint volumes – compared with 14% in banking and 18% in superannuation.

The change follows consultation between March 10 and April 22 regarding 14 recommendations from PwC related to AFCA’s funding, technology, and its fairness jurisdiction project, to be addressed under a three-year program of work.