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AFCA adopts merit assessment

AFCA merit assessment

A new merit assessment procedure will be used by AFCA in the early stages of financial services disputes to achieve overall efficiency.

The Australian Financial Complaints Authority (AFCA) has confirmed it will be incorporating merit assessment as part of its standard procedures involving financial services organisations in order to make the handling of complaints faster, fairer and more cost-effective.

The assessment will become part of AFCA’s initial case management and will result in complaints where it is determined no error or financial loss has occurred being identified early and excluded.

The move comes after the merit assessment procedure was tested by AFCA during a three-month pilot program conducted last year, which found the new approach resulted in a 75 per cent cost reduction and 50 per cent time reduction in cases when used.

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

“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.”

According to Untersteiner, the new system will also rectify circumstances where some third-party paid representatives were encouraging complainants not to consider a reasonable resolution in the early stages of the process.

The complaints body stipulated the merit assessment will only be applied where evidence gathered at the initial stages of a case clearly shows no error or loss occurred. A full investigation will still be conducted with regard to complaints of a more complex nature where more extensive evidence will be required, it confirmed.

“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,” Untersteiner noted.

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