“While the model for AFCA has been set by the government, it generates a lot of angst that consumers can complain at no cost and there’s nothing to prevent people who are frivolous from making complaints,” Mr Anderson said.

“Decisions are binding on the financial firm but not on the complainant, and there’s no mechanism to appeal decisions — there’s an independent assessor, but they can only make an assessment of the process and not the merits of the case.”

Mr Anderson said the association had put forward a number of suggestions to improve the balance of fairness in AFCA decision-making between consumers and financial firms in its submission to the Treasury’s independent review of the ombudsman’s operation.

The review, which is a requirement of the legislation that established AFCA, was announced by Financial Services Minister Jane Hume in February and closed its consultation with industry at the end of last month.

Mr Anderson said one of the AFA’s suggestions was that dispute resolution data among licensees should be tracked to determine what degree of complaints were settled with no admission of wrongdoing, as this could indicate firms were resolving what may be unfounded disputes out of commercial necessity.

“There should be some tracking of decisions that are purely commercial, because the cost of paying something out might be less than the cost of proceeding with the AFCA action,” he said. 

“That will apply in certain types of matters — if you’re got a complaint that the client did not get adequate services for the fees they paid and it amounts to a few thousand [dollars], it may simply be that the cost of defending it is more than the cost of paying it out, even though you might feel the matter has no basis. 

“We do hear about those cases, and we also get feedback that some licensees are reluctant to allow matters to go to a final determination where they can’t guarantee the outcome and the decisions are public.”