AFCA — Australian Financial Complaints Authority Explained (2026)

Updated

AFCA — Australian Financial Complaints Authority Explained (2026)

The Australian Financial Complaints Authority (AFCA) is Australia’s external financial dispute resolution scheme — a free, independent service that resolves disputes between consumers and financial firms. For mortgage borrowers, AFCA is the primary avenue when a complaint cannot be resolved directly with your lender or broker.

What Is AFCA?

AFCA was established on 1 November 2018, replacing three separate schemes (FOS, CIO, and AFSA). It is:

  • Free for consumers — you pay nothing to lodge or pursue a complaint
  • Binding on member firms — all Australian banks, lenders, and licensed mortgage brokers are required to be AFCA members
  • Independent — funded by industry but operationally independent
  • Accessible — no lawyer required; AFCA’s process is designed for consumers to navigate themselves

Website: afca.org.au

What Complaints AFCA Handles for Mortgage Borrowers

Type of complaintAFCA scope
Incorrect fees or interest charged✅ Yes
Responsible lending failures (unsuitable loan sold)✅ Yes
Financial hardship — application refused or not properly assessed✅ Yes
Misleading statements or misrepresentation✅ Yes
Default notice issued incorrectly✅ Yes
Lender credit file reporting errors✅ Yes
Mortgage broker misconduct✅ Yes
Failure to follow the Banking Code of Practice✅ Yes
Investment losses from financial advice✅ Yes (financial advice scope)
Pure commercial disputes (arms-length business lending)❌ Generally outside scope
Disputes about interest rate levels (market/pricing decisions)❌ Outside scope — AFCA cannot set interest rates

Compensation Limits

AFCA can award compensation up to set limits. For home loan disputes:

Monetary limit: $1,232,800 per complaint (current limit; check AFCA website for updated figures — limits are reviewed periodically).

Non-monetary remedies (no dollar limit):

  • Correction of credit file entries
  • Apologies
  • Process improvements
  • Changes to loan conditions
  • Waiver of fees

The AFCA Complaint Process

Stage 1 — Registration Lodge your complaint online at afca.org.au. AFCA collects details of the complaint and notifies the financial firm.

Stage 2 — Referral to the firm AFCA refers the complaint back to the financial firm’s complaints team for a final attempt at resolution. This is a second chance for IDR.

Stage 3 — Case management If unresolved, AFCA assigns a case manager. Both parties provide information. AFCA may facilitate negotiation or conciliation.

Stage 4 — Recommendation or Determination

  • AFCA may issue a non-binding recommendation first
  • If not accepted, AFCA issues a binding Determination
  • The Determination is binding on the financial firm — not on the consumer (you can reject a determination and pursue other options)

Timeframes: AFCA aims to resolve most complaints within 60–90 days of registration. Complex cases take longer.

What AFCA Cannot Do

  • Cannot investigate systemic industry conduct (that is ASIC’s role)
  • Cannot order a lender to change its standard product rates or terms
  • Cannot overturn a lender’s credit assessment decision if it was made correctly (i.e., AFCA cannot force a lender to approve a loan)
  • Cannot handle disputes outside its time limits (generally complaints must relate to conduct in the last 6 years; some longer periods apply)

Before Lodging With AFCA — The IDR Requirement

You must attempt internal dispute resolution (IDR) with the financial firm before AFCA will accept your complaint. AFCA will ask whether you have raised the complaint with the firm first.

Exception: If the firm has not responded within the required IDR timeframe (30 days for most complaints; 21 days for hardship), you can escalate immediately without waiting further.

Frequently Asked Questions

Is AFCA really free?

Yes — completely free for consumers. Costs are recovered from industry (member fees). There is no charge to lodge or pursue a complaint regardless of the outcome.

What if the financial firm rejects AFCA’s determination?

This is rare — AFCA determinations are binding on financial firms. A firm that refuses to comply with an AFCA determination faces regulatory action by ASIC and risks losing its AFCA membership (which would prevent it from operating). Non-compliance is taken extremely seriously.

Can I still go to court after AFCA?

Yes — if you reject the AFCA determination, you retain your right to take legal action. If AFCA issues a determination and the firm accepts it, the matter is finalised. Your strategy should consider that court action is typically slower and more expensive than the AFCA process.

This article provides general information about AFCA’s role in mortgage disputes in Australia. Complaint limits and processes are subject to change — always check afca.org.au for current information. Find additional resources through MoneySmart.