AFCA is required to operate in a way that is accessible, independent, fair, accountable, efficient and effective. Fairness requires complaints to be considered objectively and without bias, and by staff and decision-makers with appropriate expertise.
AFCA is required to decide a complaint based on what is fair in all the circumstances, having regard to factors such as legal principles, good industry practice, codes of practice and previous decisions (which are not binding). The effect of this is to move decisions away from relying strictly on a legal interpretation of the applicable legislation or the terms and conditions of the disputed financial product to a decision which also contemplates fairness. AFCA delivers not just procedural fairness but also substantive fairness.
For example, there may be an improper imbalance in the relationship between a financial firm and complainant.
All the circumstances of the case may make it inherently unfair to:
- sell a financial product to a consumer with cognitive impairment because he did not understand the nature of the effect of the contract.
- sell funeral insurance to children because they have low financial literacy and no need for the financial product.
- sell income protection insurance to recipients of welfare or student allowances because they could never claim upon the cover.
- apply fees for no service because no benefit is derived from payment.
An essential feature of fairness is that it be applied equally to all the parties. That is, fairness is a two-way street and must be applied to both sides of the scale. AFCA takes into account all the circumstances of the complaint. This means that applying fairness in circumstances that may look similar on the surface may result in different outcomes that favour the financial firm or complainant.