Brokers have called for a “more robust” Australian Financial Complaints Authority (AFCA) triage system to prevent firms paying disproportionately high costs in some low-value matters and to deter potential gaming of the system.

A National Insurance Brokers Association (NIBA) submission says, as intermediaries, firms can bear costs relating to issues arising from actions taken by insurers, even when there is no real basis for the complaints against the broker.

“If the broking firm needs to take the matter to a decision stage in order to obtain an appropriate decision in their favour, the cost of the process is substantial, and is often disproportionate to the amount in dispute,” NIBA says.

The submission says processes can allow disingenuous complainants to “game the system” as it is simpler and cheaper for the broking firm to make a payment and not face the cost of a formal decision.

“There are examples of disputes with very little or no merit being allowed to proceed through the process and that is something we are wanting to have a conversation about,” CEO Dallas Booth told insuranceNEWS.com.au.

NIBA also says any changes that see higher value disputes falling within AFCA’s jurisdiction should only occur in conjunction with having a competent appellant body.

AFCA, which opened its doors in November 2018, was due for independent review “as soon as practicable” after 18 months, but the process was delayed to this year due to the coronavirus pandemic.

Terms of reference include the funding and fee structures and whether there should be an additional level of review available for AFCA decisions.

AFCA’s submission to Treasury says it has a “robust triage framework” that puts complaints into fast track, standard and complex streams, with fee schedules reflecting differences, but it is taking into account feedback to improve processes for low-value complaints.

Adding an extra review level for dispute decisions is “neither necessary nor required”, AFCA says, noting processes allow case manager assessments to be further examined.

“AFCA is designed to be an informal and low-cost complaint resolution scheme,” it says. “Finality and certainty of outcomes are vital for parties’ trust and confidence in the scheme.”

The submission proposes raising the compensation cap for non-financial losses above the existing $5400 level, highlighting a general insurance dispute where a person with health issues did not receive a report on mould contamination in a water-damaged home.

AFCA also supports a small business expansion of its jurisdiction, recommended by the Australian Small Business and Family Enterprise Ombudsman, while calling for further comprehensive analysis of the proposal given the complexity of many commercial/industrial and liability claims.

The submission notes AFCA used its test case procedure for the first time last year to look at business interruption issues and says it was “useful to observe” the process conducted through the Financial Complaints Authority in the UK.

“We propose that this model could be explored in Australia,” it says. “AFCA acknowledges it would require significant consultations with the Government, regulators and other stakeholders.”

Treasury is due to submit its report to Minister for Superannuation, Financial Services and the Digital Economy Jane Hume by June 30.