Legitimacy in Australia’s Financial System External Dispute Resolution Framework: New and Improved or Simply New? **

The new Australian Financial Complaints Authority (‘AFCA’) has become an important and influential fixture in the Australian financial services landscape. It must be regarded as legitimate in order to adequately fill this role. This article examines AFCA’s legitimacy, by reference to the predecessor schemes on which it was modelled, to assess whether recent reforms to the financial system external dispute resolution (‘EDR’) framework have rectified previously existing legitimacy gaps and, consequently, improved the EDR framework. Considering AFCA’s largest predecessor scheme, the Financial Ombudsman Service, provides evidence that certain features of EDR schemes’ informal justice model potentially give rise to legitimacy gaps with accompanying adverse consequences. AFCA’s underpinning legislation and rules are closely scrutinised to ascertain the likelihood of these adverse consequences continuing, notwithstanding recent reforms. Mitigating factors and further items for consideration are proposed, noting that adaptability built in to AFCA’s design eases the way for further legitimacy-constructing reforms, if needed.