External dispute resolution
An external dispute resolution (EDR) scheme is a free, independent service for resolving disputes between consumers and credit providers. From 1 November 2018, the Australian Financial Complaints Authority (AFCA) is the sole EDR scheme to deal with consumer credit disputes. Examples of consumer credit debts include home loans, credit cards and personal loans.
If you have been served with a statement of claim for a consumer credit debt, you can get help from AFCA to resolve the dispute.
If you make a complaint to AFCA, your lender must stop taking any action against you. You should get legal advice before making a complaint to AFCA.
When to apply to AFCA
You can make a complaint to AFCA if you have already tried to resolve your dispute with the bank or credit provider or if they have started a court case against you.
If you make a complaint to AFCA, the creditor generally cannot continue with the court case or enforcement action without AFCA's consent.
If the credit provider has started a court case or got a default judgment, you should make a complaint to AFCA as soon as possible. You should get legal advice.
How to apply to AFCA
You can lodge a dispute with AFCA:
- if you are unable to resolve your dispute with the lender
- if you have been served with a statement of claim or a default judgment has been entered against you.
AFCA can consider consumer credit complaints about credit providers for claims up to $1 million.
You can lodge a dispute with AFCA by:
- applying
online - submitting a complaint by email, fax, letter of phone.
Your application should include:
- your name and your contact details
- the details of your representative (if you have one) and information about if they will be getting money for helping you
- the name and contact details of your lender
- details of the service you received from your lender (for example, a policy or account number)
- details of the complaint and any attempts you made to resolve the complaint with your lender
- the outcome you are seeking and details of any financial loss you have suffered
- photocopies of supporting documents (for example, a copy of the statement of claim, loan documents, letters from the bank, bank statements and reports).
You should tell the creditor or their legal representative that you have lodged a dispute with AFCA and remind them that they must not file for default judgment while the dispute is being considered.
Decisions made by AFCA
If your application has been accepted, AFCA will contact your lender and try to resolve the dispute through negotiation and conciliation. The creditor cannot continue with the court case or apply for judgment from the court while AFCA deals with the dispute.
If the dispute cannot be resolved by agreement, AFCA will make a decision. If you agree with the AFCA's decision, it will become binding on your lender. If you do not accept AFCA's decision, you should get legal advice.
It is not too late to file a defence if you do not agree with AFCA's decision but you should get legal advice about the strength of your defence. The plaintiff (lender) can get default judgment if you do not file a defence within 28 days of when the statement of claim was served.
For more information, go to the AFCA website.