AFCA Membership & External Dispute Resolution: What It Means

What it is

The Australian Financial Complaints Authority (AFCA) is an independent, external dispute resolution (EDR) scheme. It considers complaints about financial firms when a complaint cannot be resolved directly, and its service is free for consumers. AFCA is intended as a fair alternative to going to court.

Membership obligations and AFCA's jurisdiction are set by law and by AFCA's own rules, which change over time. This page is general only — confirm current membership requirements and scope directly with AFCA.

Key requirements

At a general level, many businesses that provide financial services or credit in Australia are required to be members of AFCA, and members must cooperate with AFCA's process. Whether a specific debt or firm falls within AFCA's jurisdiction depends on the nature of the product, the parties, and AFCA's rules.

For a recovery partner, the practical points are: knowing when AFCA may be relevant to an account; telling people about free EDR where appropriate; and pausing or adjusting collection while a relevant complaint is being handled.

Why it matters for debt recovery

If a customer has an unresolved complaint that falls within AFCA's remit, continuing to press for payment can be inappropriate and can escalate the dispute. A partner that recognises EDR rights, signposts AFCA where relevant, and responds correctly to AFCA processes protects both the customer's rights and your standing.

It also reflects good faith. Pointing people to a free, independent scheme shows that recovery is about a fair outcome, not pressure.

What to ask a provider

Ask: how do you identify accounts where AFCA may be relevant? When and how do you tell people about free external dispute resolution? What happens to collection activity once a relevant AFCA complaint is on foot? How do you ensure your own and your client's membership status, where required, is current?

How Merion approaches it

Merion recognises that some customers may have the right to free, independent dispute resolution, and we never treat raising a complaint as a reason to apply more pressure. Where external dispute resolution is relevant, we respond appropriately and can pause collection while a matter is considered. You can read about our complaints approach in the Trust Centre. For current membership rules and AFCA's jurisdiction, contact AFCA directly.

This page is general information only and is not legal advice.