Understanding AFCA: The Free Service That Holds Insurers to Account

AFCA (the Australian Financial Complaints Authority) is a free, independent dispute resolution service that handles complaints against insurers, banks, and financial services providers. It replaced the Financial Ombudsman Service in 2018 and can order insurers to pay claims, provide compensation, or change their decision. You don't need a lawyer to use it.

Key takeaways

• AFCA replaced the Financial Ombudsman Service in 2018 and handles complaints about insurance, banking, super, and financial advice.
• The service is completely free for consumers. The insurer pays the costs regardless of the outcome.
• A determination binds the insurer once you accept it, but never binds you, so you can still pursue legal action if you disagree.
• You must complete IDR (or wait 30 days for a response) before lodging with AFCA.

If your insurance claim has been denied or underpaid, you might feel like you have no options left. Many Australians do not realise there is a free, independent service designed specifically to resolve disputes between consumers and financial firms, including insurers. It is called the Australian Financial Complaints Authority, or AFCA.

AFCA exists to hold insurers accountable. Understanding how it works can make the difference between accepting an unfair outcome and getting the result you deserve.

What is AFCA?

The Australian Financial Complaints Authority is an external dispute resolution scheme established under the Treasury Laws Amendment (Putting Consumers First) Act 2018. It replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal in November 2018.

Every insurer operating in Australia must be a member of AFCA. This is a condition of holding an Australian Financial Services Licence. If your insurer refuses to resolve your complaint fairly through their internal dispute resolution process, AFCA gives you somewhere to turn.

The most important thing to know: AFCA is completely free for consumers. You will never be charged a fee, regardless of the outcome.

How the AFCA process works

The AFCA process is designed to be straightforward and accessible. Here is what to expect at each stage.

Step 1: Lodge your complaint

Before you can go to AFCA, you must first raise a formal complaint with your insurer through their internal dispute resolution process. Under the General Insurance Code of Practice, insurers must respond to your complaint within 30 calendar days (or 45 days for complex complaints involving third parties).

If your insurer has not responded within the required timeframe, or you are unhappy with their final response, you can lodge a complaint with AFCA. You can do this online at afca.org.au, by phone, or by email.

Step 2: Case management

Once AFCA accepts your complaint, a case manager is assigned. They will contact both you and your insurer to understand the dispute. At this stage, AFCA often encourages the insurer to reconsider its position. Many complaints are resolved here when the insurer realises its decision will face independent scrutiny.

Step 3: Conciliation

If the dispute is not resolved through initial case management, AFCA may arrange a conciliation conference. This is an informal discussion, not a court hearing. You and the insurer talk through the issues with an AFCA conciliator guiding the conversation. There are no barristers, no wigs, and no witness boxes. The goal is to reach an agreement that both parties can accept.

Step 4: Determination

If conciliation does not resolve the dispute, an AFCA decision maker will review all the evidence and make a formal determination. This is where AFCA's real power comes into play. A determination is binding on the insurer if you choose to accept it. The insurer cannot appeal. However, you are not bound by the determination. If you disagree with the outcome, you can still pursue other options, including court action.

What AFCA can award

For general insurance disputes, AFCA can consider claims where the amount claimed does not exceed $1,263,000. This covers most household, motor vehicle, travel, and small business insurance claims.

AFCA's decisions are based on what is fair in all the circumstances, taking into account legal principles, industry codes, and good industry practice. This means AFCA will consider your insurer's obligations under the Insurance Contracts Act 1984 (Cth), including section 13 (the duty of utmost good faith) and section 54, which limits an insurer's ability to refuse a claim based on certain acts or omissions by the policyholder.

Time limits you need to know

There are important deadlines to keep in mind. You generally have two years from the date of your insurer's final internal dispute resolution response to lodge a complaint with AFCA. If you miss this window, AFCA may not be able to consider your complaint.

There are some exceptions. AFCA may accept a late complaint if there are exceptional circumstances, but you should not rely on this. The safest approach is to lodge your complaint as soon as possible after receiving your insurer's final response.

Also be aware that the complaint must relate to conduct that occurred on or after 1 November 2018 for AFCA's standard jurisdiction. Earlier complaints may be considered under transitional arrangements for the legacy schemes AFCA replaced.

Documents you will need

Being well prepared strengthens your complaint. Gather the following before you lodge:

• Your insurance policy document, including the Product Disclosure Statement (PDS) and any endorsements or schedules
• All correspondence with your insurer, including the initial claim, any requests for information, and the final decision letter
• Any reports or assessments your insurer relied on, such as engineering, hydrology, or building reports
• Your own evidence supporting the claim, such as photos, receipts, quotes, or independent expert reports
• A clear, written summary of what happened, why you believe the insurer's decision is wrong, and what outcome you are seeking

Well-organised documentation makes it easier for AFCA to understand your position and can significantly speed up the process.

You do not need a lawyer

AFCA is specifically designed so that consumers can participate without legal representation. The process is informal, and AFCA's case managers explain each step along the way. You have the right to bring a representative or advocate, but it is not required. Most consumers handle their complaints themselves or with the help of a specialist document preparation service.

Unlike court proceedings, there are no filing fees, no formal rules of evidence, and no risk of being ordered to pay the insurer's legal costs if your complaint is unsuccessful.

Who pays for AFCA?

AFCA is funded entirely by its members, which are the financial firms including insurers. Your insurer pays a fee to AFCA for every complaint lodged against it, and additional fees if the complaint progresses to later stages. This means the cost falls on the insurer regardless of whether your complaint succeeds or fails.

This funding model is important. It means there is zero financial risk to you in lodging an AFCA complaint. It also creates a genuine incentive for insurers to resolve complaints fairly at the internal dispute resolution stage, before they reach AFCA.

How The Fair Claims Co can help

Preparing a strong AFCA submission takes time and attention to detail. You need to identify the relevant policy provisions, understand your insurer's obligations under the Insurance Contracts Act and the General Insurance Code of Practice, and present your argument clearly.

The Fair Claims Co specialises in preparing dispute documents and AFCA submissions for everyday Australians. We help you organise your evidence, identify the strongest grounds for your complaint, and put together a clear, well-structured submission that gives your case the best chance of success. Our service is not legal advice, but it is the practical support that can make all the difference when you are up against a well-resourced insurer.

For practical details on how long the process actually takes, see our guide to AFCA complaint timeframes. If you are ready to lodge your complaint, our step-by-step guide walks you through it.