Who counts as a small business here
For complaints, the test is headcount. ASIC’s guide to internal dispute resolution says the AFCA Rules define a small business as one with “less than 100 employees at the time of the act or omission by the financial firm that gave rise to the complaint”, primary producers included. ASIC has aligned the definition used for a lender’s own complaints process with AFCA’s, so the same business can use both.
One exclusion matters for businesses inside a group: AFCA cannot hear a complaint from a business that belongs to a group of related companies with 100 or more employees.
A guarantor can complain too. ASIC’s guide to AFCA names “an individual consumer or guarantor” among those eligible, and AFCA’s Rules let a complaint arise from giving a guarantee or security for finance provided to an Eligible Person (rule B.2.1(b)).
The path, step by step
- The lender’s own process. This is internal dispute resolution (IDR). ASIC requires a financial firm to give an IDR response “no later than 30 calendar days after receiving the complaint”, though some kinds of complaint have a different timeframe and there are exceptions. The day the complaint arrives is not counted.
- Check the lender is an AFCA member. The firm must be a member when the complaint is lodged. AFCA says banks and other credit providers are among the firms the law requires to join.
- Lodge with AFCA, within time. ASIC’s guide sets the usual limit as the earlier of six years from when the complainant became aware, or should reasonably have become aware, of the loss, and two years from the lender’s IDR response. AFCA may consider a later complaint only where it considers special circumstances apply (rules B.4.3 and B.4.4.2).
- AFCA considers it. It asks the parties questions and decides on the information they give it; it can require a party to provide information or attend an interview.
- Accept or decline. For most complaints, AFCA’s decision binds the financial firm if the small business accepts it; if the business does not, it keeps its legal right to go to court.
What AFCA will and will not look at on a business loan
| The question | AFCA’s position |
|---|---|
| The lender’s view of the credit risk | Excluded. AFCA must not consider a complaint about how a firm assessed the credit risk a borrower posed, or the security it required, unless the complaint is about maladministration or a hardship variation (rule C.1.3(a)). |
| How the loan or security was handled | Can be considered, as maladministration in lending, loan management or security matters. The Rules define maladministration as acting against a duty or obligation “owed at law or pursuant to the terms (express or implied) of the contract” between the firm and the complainant. |
| A very large facility | AFCA cannot consider a complaint about a small business credit facility above $6.3 million (for complaints lodged on or after 1 January 2024), whether it comes from the borrower or a guarantor. |
| What counts as one facility | A loan, lease, line of credit, guarantee or other debt instrument, or several of these approved under one contract or at the same time. ASIC’s guide adds that linked facilities are not added together when the limit is applied. |
| A guarantee | Can be considered where the guarantee or security was given for finance the firm provided to an Eligible Person (rule B.2.1(b)). See roll 02. |
AFCA’s Rules also set compensation caps. ASIC’s guide says a complainant whose claim is above a cap may be asked to give up the excess when accepting a decision, and that an accepted decision may be treated as full and final, so the rest of the claim cannot then be taken to court.
Other places a complaint can go
- The Banking Code. Where the lender is a bank that subscribes to the Code, a suspected breach can be reported to the Banking Code Compliance Committee, which investigates alleged breaches. It does not resolve individual disputes or provide compensation; for that, the committee points to the bank’s own complaints process and then AFCA.
- Unfair terms. A small business can ask a court to declare a term unfair, and can report misconduct to ASIC online; ASIC says it does not generally act for a single small business unless the matter is in the wider public interest. See roll 04.
- The PPSR. A registration that should not be on the register has its own removal process with the Registrar. See roll 05.