If something goes wrong: AFCA and mortgage broking complaints

Every Australian Credit Licence holder is legally required, as a general conduct obligation under the National Consumer Credit Protection Act 2009, to hold membership of the Australian Financial Complaints Authority, universally known as AFCA. Because credit representatives operate under an ACL holder's authorisation, complaints about a credit representative's conduct are also covered through the ACL holder's AFCA membership. In practice, this means essentially any legitimately operating Australian mortgage broker sits behind an AFCA membership a consumer can rely on if a problem cannot be resolved directly. ASIC has taken enforcement action, including cancelling or suspending credit licences, against licensees found not maintaining active AFCA membership, reflecting how seriously the obligation is treated.

AFCA itself is a free, independent external dispute resolution scheme — free to the consumer making the complaint, regardless of the outcome, and independent of both the broker and the lender involved. It is not part of ASIC, and it is not a court, though its determinations can be binding on the financial firm involved in a complaint. It exists to provide an accessible alternative to formal legal action for financial services complaints, including complaints about the conduct of a mortgage broker acting as, or on behalf of, a credit licensee.

The process generally starts before AFCA gets involved. The first step for a dissatisfied consumer is usually to raise the complaint directly with the broker or licensee's own internal dispute resolution process, since firms are often able to resolve straightforward issues quickly, and firms are generally given a defined period, commonly around 30 days, to respond. If the matter is not resolved at that internal stage, escalating to AFCA is the next step.

Making a complaint to AFCA is itself free and does not require legal representation, though a consumer is free to use one if they wish. AFCA reviews the complaint, engages with the financial firm on the consumer's behalf, and in many cases is able to help the two parties reach a negotiated resolution without a formal determination being needed at all. Where a negotiated resolution is not reached, AFCA can proceed to make its own determination on the matter, and that determination can be binding on the financial firm, including provision for compensation where AFCA finds a firm's error or inappropriate conduct caused a consumer a loss.

It is worth being clear about scope: AFCA deals with complaints about the conduct of a financial firm in connection with a financial service — for example, an allegation that a broker failed to act in a consumer's best interests, misrepresented a product, or mishandled a complaint. It is not a mechanism for disputing a lender's ordinary, properly conducted commercial lending decision, such as an application declined on its merits, and it does not replace a consumer's own right to seek independent legal advice in more serious matters.

This article is general information, not financial or legal advice, and is not a substitute for AFCA's own published guidance on how to make a complaint. If you believe a broker has not met their obligations to you, raising the issue directly with the broker or licensee first, and contacting AFCA if that does not resolve it, are the recognised next steps rather than anything set out in this article. Our directory lists Australian mortgage and finance brokers by area.

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