AFCA (Australian Financial Complaints Authority)
AFCA is the independent external dispute resolution scheme that resolves complaints between consumers and financial firms, including insurance disputes, providing fair and binding determinations.
Detailed Explanation
Common Misconceptions
- •AFCA is not a government department - it's an independent body funded by the financial services industry but operates impartially
- •You cannot go directly to AFCA - you must first attempt to resolve the dispute with your insurer through their IDR process
- •AFCA determinations are binding on the financial firm but not on the consumer, who can still pursue legal action if dissatisfied with the outcome
Real-World Examples
A policyholder's income protection claim was denied after a two-year delay; AFCA found the insurer failed to properly investigate and awarded $180,000 in back-payments plus compensation for stress
AFCA overturned a home insurance claim denial where the insurer argued pre-existing damage, finding the policyholder had adequately disclosed the property's condition
In a disputed business interruption claim during COVID-19, AFCA determined the policy wording covered pandemic-related closures, requiring the insurer to pay the claim
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Related Terms
Explore related insurance concepts
- ASIC (Australian Securities and Investments Commission)ASIC is Australia's corporate, markets, and financial services regulator that oversees insurance companies, financial advisers, and ensures compliance with consumer protection laws.
- Internal Dispute Resolution (IDR)IDR is the mandatory process insurers must have for handling customer complaints internally, requiring acknowledgment within 24 hours and resolution within 30 days for most complaints.
- External Dispute Resolution (EDR)EDR refers to independent dispute resolution services, particularly AFCA, that resolve complaints between consumers and financial firms when internal processes fail to achieve satisfactory outcomes.
- Life Insurance Code of PracticeThe Life Insurance Code of Practice is a voluntary industry code that sets higher standards than legal minimums for how life insurers should treat customers, handle claims, and conduct business.