When your lender won't budge: taking a dispute to AFCA

Most disagreements with a lender start small. A fee you didn’t expect, a default notice that arrived days after a phone call promising time, a security document that says more than the broker described. Owners usually assume the only alternatives are to put up with it or to hire a lawyer.

There is a third path that most small businesses never use. AFCA, the Australian Financial Complaints Authority, is the external dispute scheme for banks, non-bank lenders, brokers and insurers. It’s free, and it was built so that an owner without a legal budget can still be heard.

Who can take a complaint to AFCA?

Two things need to line up: your size and your lender’s membership.

• A small business. AFCA’s rules treat a business as small when it has fewer than 100 employees. For a business that belongs to a group of related companies, AFCA says it can’t consider the complaint if the group employs 100 or more people. Sole traders and partnerships qualify.
• An AFCA member. Banks and most licensed lenders belong. A private lender that operates outside the credit licensing system may not. Check the firm’s name and ABN on AFCA’s website before you start.
• A facility within the limit. For complaints lodged from 1 January 2024, AFCA cannot consider a small business credit facility above about $6.3m. That ceiling applies to a guarantor’s complaint as well as the borrower’s.

Guarantors deserve a mention because they’re often the people most surprised by a loan. If you signed a guarantee for a company or a family member’s business, AFCA has a specific approach for complaints lodged by guarantors. Our glossary entry on a guarantor explains what you’ve actually signed up to.

What sort of disputes does AFCA actually look at?

AFCA doesn’t act as a general business arbitrator. It assesses whether a financial firm treated you fairly, using the law, good industry practice and any industry codes the firm subscribes to. Banks that subscribe to the Banking Code of Practice, which covers small business customers, are held to its promises.

Complaints that fit well include:

• A lender that called in a loan, issued a default notice or appointed a receiver when the facts didn’t justify it
• Fees or charges that weren’t disclosed or that were applied wrongly
• Mishandling of a hardship request, such as ignoring it or demanding an answer in days
• Mis-selling, for example a broker or lender describing a product inaccurately
• Incorrect default listings or credit reporting errors
• Problems with security, such as a lender registering more than it was entitled to or failing to release security after repayment (see how caveats are removed after a loan is repaid)

Complaints that fit badly include “the rate was high”, “the market changed” or “I wouldn’t have signed if I’d understood the risk” with no sign that the lender did anything wrong. A contract you read, understood and signed is a contract. AFCA can still look at whether the lender explained it properly.

What are the steps, in order?

1. Gather the paper. Letter of offer, contract, emails, notes of calls with dates, default or demand notices, and your statements. A one-page timeline helps more than ten pages of attachments.
2. Complain to the lender in writing. Say what happened, what outcome you want (a refund, withdrawal of a notice, a restructure) and by when. Lenders have a set period to respond. AFCA’s published rules allow up to 30 days for most complaints and a shorter period where the complaint is about financial difficulty.
3. Keep the lender’s final response. It’s the date that starts the two-year clock to reach AFCA.
4. Lodge with AFCA. Online, by phone or in writing. Attach the same timeline and documents. State the remedy you’re seeking in dollars or actions.
5. Respond to AFCA’s requests promptly. The process moves from registration and a chance for the lender to settle, to a case manager’s attempt to agree an outcome, and finally to a written assessment if no agreement is reached.
6. Decide whether to accept. If AFCA issues a determination, you can accept it, in which case the lender is bound, or reject it and keep your other legal options open.

What can AFCA award, and what can’t it do?

For complaints lodged from 1 January 2024, the general compensation cap for direct financial loss is $631,500, but the cap for a small business loan is higher at $1,263,500, and a primary producer loan sits at $2,526,500. Interest and certain costs can be added on top.

AFCA can also order non-money outcomes: correcting a credit listing, withdrawing a default notice, releasing security, or asking a lender to reconsider a hardship request properly.

It can’t punish a lender, make it lend to you, or decide a dispute about whether you owe a debt that’s the subject of a court judgment. Nor can it fix a cash flow problem. A complaint that succeeds can take pressure off, but if the underlying repayments are the issue you’ll still need a plan. Our guide on what to do if you can’t make a loan repayment covers that side.

Three details owners miss

The clock runs from the lender’s answer, not just the event. Many owners wait until the dust settles. If the lender gave a final internal response two years ago, the window may be closed or nearly so, even though the six-year outer limit hasn’t passed. AFCA can accept late complaints where there are special circumstances, but it isn’t a safe bet.

Dollar limits move. AFCA’s rules require its monetary limits to be reviewed every three years against the higher of CPI and male average weekly earnings. The last change took effect on 1 January 2024. If you’re reading this after the next adjustment, check AFCA’s current table, because the limit that applies is the one in force on the date you lodge.

Scope has widened. From 12 March 2026, AFCA also investigates complaints about receiving banks and unauthorised opening of accounts by scammers in someone’s name. If you’ve been hit by an identity or payment scam involving your business account, that’s now a place to take it.

AFCA, a commissioner, or a lawyer: which first?

They solve different problems.

Route	Best for	Cost	Catch
Lender’s internal complaint	Every dispute, as step one	Free	Lenders vary in how seriously they treat it
AFCA	Disputes with a financial firm that’s a member	Free	Limits on facility size, time limits, firm must be a member
State small business commissioner	Disputes with another business, landlord or government body	Low or free	Generally doesn’t handle lender disputes (see our state-by-state guide)
ASBFEO	Information and referral, particularly federal agency and ATO disputes	Free	Points you on to AFCA for lender complaints
Lawyer or court	Large sums, urgent injunctions, enforcement already under way	Often high	Slow and costly relative to the amount in dispute

If enforcement is under way, don’t pick one route and wait. Lodge the complaint and get advice on the deadline in the notice, in parallel.

Should you complain, or fix the loan?

It depends on what you want. If the grievance is about a specific wrong, a complaint is the right tool. If the real issue is that the loan has become unaffordable or the relationship has broken down, a complaint might win a concession but won’t change the terms of a structure that no longer works.

Banks are often the cheapest finance available, and many resolve complaints properly at the first stage. If you’ve got a reasonable bank and a fixable problem, use the internal process. If the loan has soured, it can be worth looking at refinancing out of expensive debt or when to refinance a business loan, while the complaint runs in the background. For a view on how a lender is likely to behave once an account is in trouble, see what happens if your business loan defaults.

A worked example makes the sequencing concrete. Imagine a landscaping company with an $180k equipment facility. It misses one payment after a client pays late, phones the lender, is told “we’ll note the file”, and a week later receives a default notice with 14 days to remedy. The owner writes a complaint the same day, attaches the call date and time, asks for the notice to be withdrawn and a short repayment pause, and meanwhile arranges a bridging line to clear the arrears before the notice expires. Two tracks, one deadline: the complaint protects the principle, the payment protects the business.

If a decline or a default is part of your story, you’re not stuck. We help owners who’ve been told no, including those declined by the bank.

Tell us what’s going on in your business. It takes about a minute and nothing is checked on your credit file.

Where does a new loan fit if you’re in dispute?

Disputes and funding needs often arrive together. A lender might be holding your security while you’ve got payroll next week, or the bank has declined a variation and you still need working capital.

If that’s you, the order is simple. Keep the dispute moving through AFCA, and separately find out whether another lender can fund you now. Lenders judging a new application look at your current cash flow, your security and your repayment history, not at the existence of a complaint. Be upfront about it in the conversation, because a broker or lender who knows the full picture can match you to something that suits.

Our enquiry form takes about a minute, and enquiring doesn’t touch your credit file. We don’t pass your details to a stack of lenders. A real person reads your situation, then phones you to talk through what could work. The more accurate your answers, particularly on amounts, security and any notices you’ve received, the sooner the right option comes up.

Ask for a call about funding while your dispute runs →