AFCA halves assessment time with new merit system

Following a three-month trial process last year, AFCA, a non-government ombudsman service, has now adopted the merit assessment as a permanent feature of its in-house process to evaluate complaints in their initial case management stage.

And if a complaint is found to be without merit, AFCA has discretion to “exclude” the complaint under its rules.

According to AFCA, the merit assessment also significantly improves its productivity by essentially halving the time taken to resolve select cases, and the fee charged was as much as 75 per cent lower.

Reducing the price of the service to that extent was an important catalyst in AFCA’s decision to incorporate the merit assessment on a permanent basis, making it an attractive feature for customers who might otherwise be put off by the potential costs that could eat into their budgets.

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

“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,” Mr Untersteiner said.

He said the issue was exacerbated 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 AFCA’s process.

According to AFCA, complaints that raise more complex issues, with significant documentation involved, would still require an investigation to reach a view on what has most likely occurred.

“The balancing act is to ensure we are not closing complaints that do have merit. Sometimes the only way to determine this is through further investigation,” Mr Untersteiner said.

The creation of the merit assessment follows the release of an independent review into its financial dispute resolution service, which resulted in 14 recommendations, including recommendations 4 and 7, which addressed poor conduct by some paid advocates and aimed to ensure AFCA’s funding model does not deter firms from defending complaints.