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District Court stays claim because of Australian Financial Complaints Authority’s bureaucratic bumbling

Westpac’s social responsibility department reacts to the banking Royal Commission.


“The nine most terrifying words in the English language are: I’m from the Government, and I’m here to help.”

President Ronald Reagan, AUGUST 12, 1986

It is well known that many public bodies these days are obsessed with political correctness and identity politics, and spend a lot of their time fussing on topics such as equity, diversity, inclusion, harmony days, ‘unconscious bias’, and the like. Once can only imagine that they hold regular meetings where they talk about topics such as their gender pronouns, paleo pear and banana bread, and what a relief that in a few months time the Morrison federal government will be replaced by a Labor-Greens Coalition, but how the ideal would be a Greens Government with Adam Bandt as Prime Minister and socialism being tried once again.

Supporters and apologists of this frivolity often use the cliché that organisations can “chew and walk gum at the same time”, however a recent District Court decision to stay a proceeding as a result of bureaucratic bumbling undermines such claims.

The facts

The Australian Financial Complaints Authority is an external dispute resolution scheme that is supposed to deal with complaints from consumers and small business about financial products and services. AFCA is a not-for-profit company limited by guarantee that has been authorised by the responsible minister to operate the AFCA dispute resolution scheme in accordance with the Corporations Act 2001 (Cth).

The following case reveals that the extent to which AFCA deals with complaints is doubtful, however we were elated to find out that what is not in doubt is that it commemorates ‘Transgender Day of Remembrance‘, and on its own admission everyone at AFCA recently wished us a Happy Mardi Gras.

On 25 November 2019, ANZ Banking Group applied to the District Court for recovery of possession of mortgaged properties on the basis that the debt that is secured by those mortgages had not been paid by the respondent debtors. The debtors then made complaint to AFCA, which resulted in the proceedings being adjourned pending AFCA’s determination. In September 2021, AFCA belatedly issued what it called a recommendation, which was not binding on the parties.

Relevant Law

Section 1050 of the Corporations Act 2001 provides that:

Minister may authorise an external dispute resolution scheme
(1) The Minister may, by notifiable instrument, authorise an external dispute resolution scheme if the Minister is satisfied that the mandatory requirements under section 1051 will be met.
Note: Once the authorisation of an external dispute resolution scheme comes into force, the scheme is known as the AFCA scheme and the operator is known as AFCA (AFCA is short for Australian Financial Complaints Authority): see the definitions of AFCA and AFCA scheme in section 761A.

Section 1051(4) of the Corporations Act 2001 provides that:

Operational requirements
(4) The operational requirements are that:
(a) the complaints mechanism under the scheme is appropriately accessible to persons dissatisfied with members of the scheme; and

(b) complaints against members of the scheme are resolved (including by making determinations relating to such complaints) in a way that is fair, efficient, timely and independent.

Section 1052 of the Corporations Act provides that:

“Obligation to comply with mandatory requirements
AFCA must ensure that the mandatory requirements for the AFCA scheme under section 1051 are complied with.”

Rule 5 of the Uniform Civil Procedure Rules provides that:

5 Philosophy—overriding obligations of parties and court
(1) The purpose of these rules is to facilitate the just and expeditious resolution of the real issues in civil proceedings at a minimum of expense.
(2) Accordingly, these rules are to be applied by the courts with the objective of avoiding undue delay, expense and technicality and facilitating the purpose of these rules.
(3) In a proceeding in a court, a party impliedly undertakes to the court and to the other parties to proceed in an expeditious way.
(4) The court may impose appropriate sanctions if a party does not comply with these rules or an order of the court.
The court may dismiss a proceeding or impose a sanction as to costs, if, in breach of the implied undertaking, a plaintiff fails to proceed as required by these rules or an order of the court.

In Aon Risk Services Australia Limited v Australian National University [2009] HCA 27 (Aon), French CJ noted that:

“The Judicature Acts and associated Rules of Court are reflected in rr 501 and 502 of the ACT Rules. The ACT Rules, like their precursors, confer the discretion to give leave to amend and impose the duty to make amendments for the purpose of deciding the real issues in, and avoiding multiplicity of, proceedings. The discretion is exercised in the context of the common law adversarial system as qualified by changing practice. But that is not a system which today permits disregard of undue delay. Undue delay can undermine confidence in the rule of law. To that extent its avoidance, based upon a proper regard for the interests of the parties, transcends those interests. Another factor which relates to the interests of the parties but transcends them is the waste of public resources and the inefficiency occasioned by the need to revisit interlocutory processes, vacate trial dates, or adjourn trials…”

In Aon, Heydon J made the following observations:

“While in general it is now seen as desirable that most types of litigation be dealt with expeditiously, it is commonly seen as especially desirable for commercial litigation. Its claims to expedition may be less than those of proceedings involving, for example, extraordinary prejudice to children; or the abduction of children; or a risk that a party will lose livelihood, business or home, or otherwise suffer irreparable loss or extraordinary hardship, unless there is a speedy trial. But commercial litigation does have significant claims to expedition. Those claims rest on the idea that a failure to resolve commercial disputes speedily is injurious to commerce, and hence injurious to the public interest…

“Commercial life depends on the timely and just payment of money. Prosperity depends on the velocity of its circulation. Those who claim to be entitled to money should know, as soon as possible, whether they will be paid. Those against whom the entitlement is asserted should know, as soon as possible, whether they will have to pay. In each case that is because it is important that both the claimants and those resisting claims are able to order their affairs. How they order their affairs affects how their creditors, their debtors, their suppliers, their customers, their employees, and, in the case of companies, their actual and potential shareholders, order their affairs. The courts are thus an important aspect of the institutional framework of commerce. The efficiency or inefficiency of the courts has a bearing on the health or sickness of commerce.”

Further, in Expense Reduction Analysts Group Pty Ltd & Ors v Armstrong Strategic Management and Marketing Pty Ltd & Ors [2013] HCA 46, the unanimous judgment of the High Court referred to Aon and stated that:

“…speed and efficiency, in the sense of minimum delay and expense, are essential to a just resolution of proceedings. The achievement of a just, but timely and cost effective resolution of a dispute has effect not only upon the parties to dispute, but upon the Court and other litigants.”

District Court decision

Barlow DCJ decided to stay the proceedings because of the delay occasioned by AFCA:

“given my lack of confidence that the proceeding will be able to be dealt with one way or another relatively soon, I am not prepared simply to adjourn the matter for another few months, as the parties seem to wish me to do. In the circumstances, I will order that the proceeding be stayed. It will then be necessary, if any of the parties wishes to re-enliven it, to make an application to remove the stay. Given that arguably no step has been taken in the proceeding and, by then, undoubtedly no step will have been taken in the proceeding to further it towards a final determination, for over two years, it would be necessary for a party to apply for leave to proceed in any event”

Judge Barlow QC directed that a copy of the reasons be forwarded to AFCA.


This decision is an embarrassing revelation that AFCA is failing to do its job of handling matters before it in an efficient or timely manner, as per its statutory obligations under the Corporations Act. Moreover, by failing to make a binding decision at all within a long period of time, it is costing the community dearly. Taxpayer resources have been needlessly spent already in the drawn out District Court proceedings that have now been stayed, which has also caused other matters awaiting determination being delayed. Furthermore, should financial institutions not recover all of the costs of enforcement and interest accrued to date as a result of AFCA’s listlessness, there is a risk that this will drive up the cost of borrowing for all borrowers. For these reasons, AFCA’s bumbling undermines the prosperity of all Australians. And the cost of the membership fees that financial institutions pay AFCA is no doubt passed onto the customers of those financial institutions.

Perhaps AFCA needs to focus on its statutory role and spend less time worrying about Lunar New Year, Transgender Day of Remembrance, paleo pear and banana bread, Mardi Gras and the like. It appears to have been woke and asleep at the wheel.

Time to wake up and stop being woke.

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