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Contributed by Elizabeth Samra, Consumer Law Centre of the ACT and current to May 2018

Credit licensees must have a dispute resolution system that consists of:
  • internal dispute resolution (IDR) procedures that meet the standards or requirements made or approved by ASIC; and
  • membership of an EDR scheme.
Nearly all unresolved disputes must first be dealt with via internal dispute resolution. If the consumer is dissatisfied with the result of internal dispute resolution, a complaint can be raised at external dispute resolution or court. Most disputes between consumers of credit and credit providers/finance brokers are not heard in courts and court is generally not recommended as the preferred avenue to seek redress as external dispute resolution is free to consumers and aims to resolve disputes informally and efficiently.

If a complaint is raised at external dispute resolution, the member credit provider generally cannot:
  • Commence legal action against the consumer relating to the dispute;
  • Continue legal proceedings which it has commenced;
  • Take any debt recovery action relating to the dispute;
  • Assign the debt.
If a consumer accepts a decision from an external dispute resolution scheme, it will be binding on the financial service provider. If the consumer does not accept the decision, the decision is not binding, and the consumer can pursue other avenues if within time. Decisions made at external dispute resolution are not binding on courts.

As discussed above, the establishment of AFCA replaces the predecessor external dispute resolution schemes - Financial Ombudsman Services, the Credit and Investments Ombudsman and the statutory Superannuation Complaints Tribunal.


The preferred model for dealing with credit disputes is external dispute resolution. The ACT Magistrates Court and Supreme Court, the Federal Circuit Court and the Federal Court are vested with the jurisdiction to hear credit disputes.

Under s 199 of the NCCP Act there is an ‘opt in’ small claims procedure. Proceedings are to be dealt with as small claims proceedings if a person applies to a Magistrates court or the Federal Circuit Court for an order allowable under the section and the consumer consents to have the small claims procedure apply. The types of matters that can be heard are limited, and include:
  • Applications for financial hardship;
  • Applications for compensation or a breach of the responsible lending obligations where the amount in dispute is under $40,000;
  • Unjust applications where the contract value (loan amount) is under $40,000.

Australian Securities and Investment Commission

ASIC, as the sole regulator, has the power to investigate breaches of the law. Complaints regarding breaches of the credit law can be reported to ASIC, particularly where the party involved in credit activity is not registered or licenced or where the complaint may be a systemic issue.

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