Can an Insolvent Small Business Make an AFCA Complaint?

Generally, the Australian Financial Complaints Authority (AFCA) can consider a complaint from a business under external administration, or a complaint from a bankrupt individual, only if the insolvency practitioner’s consent is obtained. The narrow exception concerns a superannuation complaint about a bankrupt fund member’s benefit that has not vested in the member’s trustee in bankruptcy; because only individuals can make superannuation complaints, this is not a general exemption for insolvent companies. AFCA’s small-business guidance says a small business has fewer than 100 employees, a complaint cannot be considered where the relevant related-company group has 100 employees or more, and complaints about credit facilities exceeding $6.3 million lodged on or after 1 January 2024 are excluded (Figures checked 1 October 2026).

When does the insolvency-practitioner consent rule apply?

AFCA’s general position depends on the applicant’s status:

The superannuation exception depends on the nature of both the complaint and the benefit. It does not allow a company or other organisation to make a superannuation complaint, and it does not remove AFCA’s other scope requirements.

Does the business still need to meet AFCA’s small-business test?

Yes. Practitioner consent addresses the external-administration issue, but AFCA still applies its own eligibility rules.

AFCA describes its small-business position as follows:

What financial complaints can AFCA consider?

AFCA can assist a small business with complaints about a financial firm. Its stated scope includes:

• Business finance: business credit cards, loans, commercial bills, hire purchases and instalment leases.
• Other business credit: letters of credit, lines of credit and overdrafts.
• Banking: business transaction accounts, foreign currency accounts, online payment methods, bank drafts and merchant facilities.
• Investment and financial advice: complaints about a range of investment and financial advice products.

A complaint about a foreign currency account must arise from a contract governed by Australian law.

What about small-business insurance?

AFCA’s jurisdiction over general insurance complaints depends on the product and cover type. It may consider complaints about:

• Computer and electronic breakdown.
• Fire or accidental damage.
• Glass breakage, including shop fronts.
• General property or work tools.
• Loss of profits or business interruption.
• Medical indemnity.

AFCA says it cannot consider complaints about cover for:

• Contractors All Risks.
• Fidelity Guarantee.
• Legal Liability, including Public Liability and Products Liability.
• Professional Indemnity.
• Industrial Special Risks.

That does not necessarily remove AFCA’s jurisdiction over every policy of an excluded type. For example, AFCA may consider certain cover within an Industrial Special Risks policy. It can also consider an insurance broker’s conduct in following instructions or arranging a policy, and an insurer’s decision or conduct concerning an eligible small-business insurance product.

The policy’s PDS remains important when checking the cover type, definitions and exclusions.

Does the $6.3 million credit-facility limit cover more than a loan?

Yes. For complaints lodged on or after 1 January 2024, AFCA cannot consider a complaint about a small-business credit facility exceeding $6.3 million.

A credit facility may include any combination of the following if approved under the same credit contract or at the same time:

• A loan.
• A lease.
• A line of credit.
• A guarantee.
• Another debt instrument.

The exclusion applies whether the complainant is the borrower or a guarantor. For a complaint lodged before 1 January 2024, the relevant version of AFCA’s Rules must be checked for the corresponding jurisdictional limit.

What happens after AFCA receives a complaint?

AFCA’s process generally works as follows:

• AFCA refers the lodged complaint to the financial firm.
• The financial firm reviews it and attempts direct resolution within a set timeframe.
• If the firm does not resolve the complaint within that timeframe, AFCA progresses it for further consideration.
• If direct resolution fails, AFCA may use negotiation or conciliation to seek a settlement.
• AFCA may provide the complainant and financial firm with a preliminary assessment of the complaint’s merits.
• If the complainant rejects that assessment, AFCA makes a determination, which is binding on the financial firm.

AFCA outcomes may include compensation for direct financial loss, indirect financial loss and non-financial loss. Monetary caps apply to non-superannuation outcomes, but the cited AFCA guidance does not state the dollar amount of those caps.

How can the business make an AFCA complaint?

If the business is under external administration, obtain the insolvency practitioner’s consent before lodging. If eligibility is otherwise unclear, AFCA recommends submitting the information so it can review the complaint and discuss it with the complainant.

AFCA launched its online complaints portal on Monday 17 June 2024. A complainant who creates an account can use the portal to manage the complaint throughout the AFCA process.

AFCA’s service is free to access. It also says licensed financial services providers in Australia must belong to AFCA and participate in its process. Its online search can be used to check whether a financial firm is a member. People needing additional support can also contact a third-party agency.

This is general information, not financial or legal advice. Check the current AFCA small-business page before lodging a complaint, seek advice from the insolvency practitioner where relevant, and read the policy’s PDS for an insurance dispute.

Sources

• Small Businesses with a financial complaint | AFCA

FAQ

Can an insolvent business complain without the insolvency practitioner’s consent?

Generally, no. AFCA says it can consider a complaint from a business under external administration only if it obtains the insolvency practitioner’s consent.

Can a company make the unvested superannuation complaint for a bankrupt member?

No. AFCA says superannuation complaints can only be made by individuals. The unvested-benefit exception is therefore not a general insolvency exemption for companies.

Does AFCA charge a fee?

No. AFCA says its service is free to access, including the help available through its complaint channels.

What happens if the complaint does not meet AFCA’s Rules?

AFCA may be unable to resolve the complaint and can direct the complainant to other sources of help.