This fact sheet is for information only. It is recommended that you get legal advice about your situation.
This fact sheet deals with how to resolve a dispute with your lender, broker and rental company (for goods). A dispute can involve financial hardship or ANY situation where you believe you have suffered a loss.
WHAT IS EXTERNAL DISPUTE RESOLUTION (EDR)?
EDR is a service for resolving disputes between consumers and members of an EDR scheme. For financial matters, the Australian Financial Complaints Authority (AFCA) is the relevant EDR scheme. AFCA is funded by the members of the scheme (lenders and brokers). It is the main way to resolve a dispute and is much better than going to Court because:
- It is free for consumers;
- It is independent (despite being funded by industry);
- All enforcement action stops (including Court proceedings) while AFCA considers your dispute;
- A decision will (usually) be made by AFCA if the parties cannot negotiate a solution. The decision is binding on the EDR member if you accept the decision. If you don’t accept the decision you can still go to Court (subject to any time limits);
- AFCA can decide on repayment arrangements due to financial hardship under the Credit Law;
- Disputes can be lodged in EDR before and after court proceedings have been issued but usually not after Court judgment.
If the debt was originally a telecommunications or energy and water debt, you need to lodge in the relevant free dispute resolution scheme against the original company where you obtained the service.
TIO (Telecommunications Industry Ombudsman)
www.tio.com.au; Phone: 1800 062 058
EWON (Energy & Water Ombudsman NSW)
www.ewon.com.au; Phone: 1800 246 545
THERE IS ONE EDR SCHEME AVAILABLE FOR CREDIT DISPUTES IN AUSTRALIA:
Australian Financial Complaints Authority (AFCA)
Ph: 1800 931 678
All lenders, finance brokers, mortgage managers and mortgage originators who arrange or provide credit must be members of AFCA as a condition of the license (or registration). This means that if you have a dispute and the credit law applies then you can go to EDR about your dispute (in most circumstances).
I’VE GOT A DISPUTE, WHAT DO I DO NOW?
You should raise your dispute with your lender, broker or rental company first. This does not have to be in writing you just need to ring and say:
- What the problem is; and
- What you want them to do to fix the problem.
Don’t worry about exactly what you say. It does not have to be perfect you just need to make it clear you have a problem. You do not have to accept the resolution offered if it does not resolve the problem. If you are not sure what to do say you will get advice and ring back.
I’VE RAISED A DISPUTE BUT MY PROBLEM IS STILL NOT FIXED, WHAT DO I DO NOW?
You need to lodge a dispute in writing with the relevant EDR scheme. DO NOT just phone the scheme as your dispute is not lodged if you ring.
If you are at risk of:
- Court proceedings being commenced against you; or
- Court proceedings have commenced but a judgment in Court has not been obtained
Then you should lodge with AFCA immediately and seek urgent advice.
HINTS FOR LODGING A DISPUTE IN EDR
If possible you should lodge the dispute online as it will be received straightaway.
Keep the information in your dispute simple to start with as you can add further information later.
Keep a copy of your dispute form.
There are two detailed parts of the dispute/complaint form to complete and hints for completing that detail appear below.
Write a simple description of how your problem arose. For example:
- I had a direct debit to pay BIG TELCO for my phone bill from my savings account
- On 6/3/13, I cancelled my phone agreement with BIG TELCO.
- On the same day I handed a letter to my bank stating that I wanted the direct debit cancelled. A copy of this letter dated 6/3/13 is attached.
- On 29/3/13, the bank debited my account in favour of BIG TELCO for the amount of $110. A copy of my statement is attached.
Write a simple description of your dispute. For example:
“The bank should have cancelled the direct debit when requested. As the bank did not cancel the direct debit as I requested, I lost $110 from my account.”
FAIR AND REASONABLE RESOLUTION OF THE DISPUTE REQUESTED
Write how you want the dispute resolved. For example:
I want the following resolution:
- The bank must cancel the direct debit immediately; and
- Refund $110 and any associated fees resulting from the unauthorised debit.
WHAT WILL HAPPEN AFTER I SEND MY COMPLAINT TO AN EDR SCHEME?
- The EDR scheme will send you a letter of authority for you to sign to enable the lender to give the EDR scheme information about your matter. Make sure the signed authority is returned to the EDR scheme by the required date.
- The EDR scheme will then send your complaint to the member for it to respond. The member is given a certain time to respond (usually 30 days).
- The lender will then send you a response to your complaint. IMPORTANT: You don’t have to settle with the lender. If you are not happy with the Lender’s response say so! For example, you can write to the EDR scheme and say: I refer to the letter from the lender dated___________. My dispute with the lender is still not resolved because… (provide your reasons). I request that the EDR scheme investigate this matter.
- This “lender responds then you reply” process may occur again. Do not give up! Make sure you respond by any date set by the EDR scheme or seek an extension of time if you can’t respond by the date set. If an extension of time is given confirm this in writing with the EDR scheme. If you believe the dispute has not been resolved you must tell the EDR scheme why it is not resolved and that you want your dispute to be investigated.
- Once your complaint has gone to investigation, the EDR scheme will investigate your matter. The EDR Scheme will usually ask for further information. You should provide the information and get legal advice about how to argue your case.
- Eventually the EDR Scheme will make a recommendation. You have the option of rejecting the recommendation, if you wish. Write to the EDR scheme with your reasons for rejecting the recommendation and the case will be referred to the Ombudsman to issue a finding. If you reject the finding, legal action is usually your only other alternative. Legal action can be expensive and you may not have a better chance of success. You should get legal advice before rejecting a Finding or Recommendation of any EDR scheme.
NEED SOME MORE HELP?
See Fact sheet: Getting help for a list of additional resources.
Last Updated: October 2018.