AFCA opens consultation on its approach to non-financial loss claims

The Australian Financial Complaints Authority (AFCA) has begun a consultation period to discuss its proposed changes to how it intends to consider non-financial claims moving forward.  

AFCA has a long history of approaching claims that include non-financial loss. Its existing approach when considering such claims includes: 

• looking at the circumstances that give rise to a non-financial loss claim 
• what AFCA’s expectations are from the complainant 
• cap on how much compensation can be given 
• broader principles that govern how the final compensation is decided. 

Currently, AFCA can choose to give compensation as a form of redress in circumstances of non-financial loss. This compensation can be up to a maximum of $5,400 per claim and excludes superannuation complaints. However, as per feedback from AFCA members and other stakeholders, there was a need for further clarity around how AFCA assessed non-financial loss claims.  

As a result, AFCA has proposed to add a matrix in its existing approach documents that would act as a guide in interpreting what might be the correct range as a form of compensation that would be proportional to the harm suffered for non-financial loss. This matrix would help illustrate the level of compensation AFCA might consider in its assessment, based on the severity of adverse impact of a firm’s conduct on the complainant and its duration. 

Other proposed changes include updating the case studies AFCA uses in its approach documents, clarifying the scope and jurisdiction and ensuring that there is language consistency. 

Guide to compensation awards 

Key/Legend 

AFCA’s full list of proposed changes to its approach to non-financial loss can be found on AFCA’s website. The consultation period closes on 1 May 2023.