The Australian Financial Complaints Authority (AFCA) and the Federal Government have supported recommendations from a Treasury review to improve the ombudsman’s performance.

The review’s 14 recommendations, mostly for AFCA to implement, include a focus on transparency, the decision-making process and the approach to fairness.

“The Government welcomes the overall finding of the review of AFCA that it is performing well and providing an effective dispute resolution service for consumers and small businesses,” the response released by Minister for Superannuation, Financial Services and the Digital Economy Jane Hume says.

Recommendations include that the funding model should not disincentive financial firms from defending complaints that they consider do not have merit, and that AFCA should better take into account the circumstances of small financial firms.

It also says AFCA should be more transparent in its public reporting of systemic issues, including on a de-identified basis, stresses the criteria it must take into account in making fair decisions and that the service should not act in a manner that compromises the impartiality of the complaints resolution process.

The review rejects any need for further merit reviews of AFCA decisions and finds it is not necessary to raise monetary limits or compensation caps set for the ombudsman service.

“Several respondents put forward proposals for increases to a number of the jurisdictional limits, but in the context of the intended roles for AFCA on the one hand and courts and tribunals on the other, there is insufficient evidence to recommend altering the limits,” the report says.

AFCA opened its doors as a one-stop shop for financial complaints in November 2018 under legislation that required a review early into its operation. Submissions were invited earlier this year.

AFCA Chief Ombudsman David Locke says the report will aid scheme improvement and the organisation will consider any potential impacts on industry costs and the timely resolution of complaints when acting on the recommendations.

“Overall, this is a very positive report card, particularly for an organisation barely three years old,” he said.

“We know there are areas where we can improve as we move out of our establishment phase, and some of these have been identified in the review.”

See ANALYSIS.