AFCA complaints handling for financial firms in 2026

What AFCA complaints handling means in 2026

The Australian Financial Complaints Authority (AFCA) is the single external dispute resolution (EDR) scheme for financial complaints in Australia. If a consumer or small business cannot resolve a complaint directly with a financial firm, they can take it to AFCA for a free, independent decision that is binding on the firm. For financial firms, "AFCA complaints handling" covers two linked obligations: running a compliant internal dispute resolution (IDR) process, and being a member of AFCA so unresolved complaints can be escalated.

AFCA was established under the Treasury Laws Amendment (Putting Consumers First — Establishment of the Australian Financial Complaints Authority) Act 2018 and operates under the Corporations Act framework administered by ASIC.

This article explains who the rules apply to, how a complaint flows from IDR to AFCA, the core timeframes, what firms must do, and where firms most often go wrong.

Who AFCA applies to

AFCA membership is a legal requirement for most entities that provide financial services or credit to retail clients. ASIC's RG 271 (Table 1) lists the firms that must be AFCA members:

• Australian Financial Services (AFS) licensees that provide services to retail clients
• Unlicensed product issuers and unlicensed secondary sellers
• Trustees of regulated superannuation funds (other than SMSFs), approved deposit funds and RSA providers
• Australian credit licensees
• Most credit representatives

For AFS and credit licensees, AFCA membership forms part of the required dispute resolution system (s 912A(1)(g) of the Corporations Act and s 47 of the National Credit Act). A firm that lets its membership lapse is in breach of its licence obligations and exposed to ASIC enforcement action. Some firms have IDR obligations without AFCA membership (unlicensed carried over instrument lenders), and some must join AFCA without running their own IDR (credit representatives). If you are unsure whether your business model is captured, confirm directly with ASIC or AFCA rather than assuming exemption.

AFCA can consider complaints from individual consumers and from small businesses that meet AFCA's eligibility criteria. Monetary limits and compensation caps apply and are reviewed periodically, so check the current figures in the AFCA Rules before relying on a specific amount.

How a complaint moves from IDR to AFCA

The complaints pathway is sequential. A consumer must give the firm a genuine opportunity to resolve the matter internally before AFCA will consider it.

1. Complaint received. Any expression of dissatisfaction that meets the RG 271 definition of a "complaint" triggers the IDR clock — including complaints made to frontline staff and posts on the firm's own social media channels where the author is identifiable and contactable.
2. Internal dispute resolution (IDR). The firm investigates and provides a written IDR response that explains the outcome and the customer's right to escalate to AFCA.
3. Escalation to AFCA. If the customer is dissatisfied with the IDR response, or the firm misses its IDR deadline, the customer can lodge with AFCA.
4. AFCA process. AFCA first refers the matter back for resolution, then moves through case management, conciliation, and — if unresolved — a binding determination.

A determination is binding on the firm if the complainant accepts it. The complainant retains the right to pursue other legal avenues if they reject it.

Key timeframes and thresholds

The IDR timeframes are set by ASIC's Regulatory Guide 271 — Internal dispute resolution (RG 271), which carries enforceable provisions.

For most complaints, the firm must provide a written IDR response no later than 30 calendar days after the complaint is received. The clock runs in calendar days, not business days.

If the firm cannot meet the deadline because the complaint is genuinely complex or delays are outside its control, it must send an IDR delay notification before the deadline expires. That notification must explain the reasons for the delay, the customer's right to go to AFCA, and AFCA's contact details. A delay notification is not a free extension: RG 271 reserves it for complaints that are particularly complex or where circumstances beyond the firm's control are causing delays.

Hardship and default-notice complaints must generally be answered within 21 calendar days, with specific rules where the firm needs more information or an agreement is reached (RG 271.86–RG 271.101).

What financial firms must do

A defensible AFCA complaints-handling posture in 2026 rests on a few concrete controls. See ASIC RG 271 internal dispute resolution for the full standard.

• Maintain current AFCA membership and pay levies on time.
• Define "complaint" broadly in your policy, consistent with RG 271, so frontline and social-media complaints are captured.
• Record every complaint in a register with enough detail to meet ASIC's IDR data-reporting obligations. ASIC collects IDR data from firms and uses it for surveillance.
• Hit the 30-day clock (or the applicable shorter period) and issue compliant written IDR responses with reasons and AFCA referral wording.
• Use delay notifications correctly — before the deadline, only when justified.
• Identify systemic issues. RG 271 requires firms to look beyond the individual complaint and remediate root causes.
• Train staff and monitor complaint volumes, themes, and timeframe breaches as a board-level risk metric.

For the wider context of how complaints handling sits within licensing and conduct obligations, see the financial services topic hub.

Common pitfalls

The recurring failures that draw regulator and AFCA attention are practical, not technical:

• Treating only formal "complaints" as complaints. Many firms miss informal or verbal complaints, understating volumes and breaching IDR rules.
• Missing the 30-day deadline silently. Letting the clock expire without an IDR response or a valid delay notification is a clear breach and an automatic AFCA escalation right.
• Boilerplate IDR responses. Responses that do not address the specific issue, give reasons, or set out AFCA rights fail RG 271.
• Letting membership lapse. A lapsed AFCA membership puts the entire licence at risk.
• Poor IDR data quality. Inaccurate or incomplete complaints data undermines ASIC reporting and conceals systemic issues.
• No systemic-issue loop. Resolving complaints one by one without fixing root causes invites repeat complaints and adverse determinations.

Recent and proposed changes

Two developments are reshaping the landscape and should be on every firm's radar:

• Scams Prevention Framework (SPF). ASIC states: "Entities subject to the SPF must be members of AFCA by 1 September 2026. Most SPF obligations will commence on 31 March 2027." Additional obligations are expected to commence by the end of 2027. See ASIC's SPF page.
• Compensation Scheme of Last Resort (CSLR). The CSLR pays eligible consumers where an AFCA determination goes unpaid in certain advice, credit, and securities matters. Firms in scope contribute via levy; check current scope and levy settings with the scheme operator.

Firms should also monitor periodic updates to the AFCA Rules and to RG 271 itself. AFCA's monetary limits, compensation caps, and small-business thresholds are reviewed over time, so always confirm the current figure rather than relying on a previously published amount.

The safest position is to treat AFCA complaints handling as an ongoing control environment — current membership, a live complaints register, disciplined timeframes, and a systemic-issue feedback loop — rather than a one-off policy document.