AFCA needs an expert witness practice note like VCAT's PNVCAT2 to ensure unbiased insurance reporting

The Australian Financial Complaints Authority (AFCA) is central to resolving insurance and other financial disputes between consumers and financial service providers. However, a significant gap remains in its procedural fairness framework: the lack of a formal guideline to ensure expert witnesses are truly independent and unbiased.

In contrast, the Victorian Civil and Administrative Tribunal (VCAT) employs a powerful Practice Note PNVCAT2—which outlines clear expectations for expert witnesses in respect of their duty to the tribunal over any party. This framework requires experts to provide objective, balanced opinions, even if that means disadvantaging the party that engaged them. Such a standard is crucial in preventing the use of “hired guns” whose opinions may be skewed in favour of the insurer that pays their invoice.

AFCA, on the other hand, operates without a similar safeguard. It has fact sheets but they lack the same rigour. Expert evidence, particularly in insurance disputes, often becomes the basis in determining liability, say proximate cause or quantum of loss. Whether it’s a structural engineer assessing property damage or a builder or other professional the neutrality of these experts is critical to ensuring just outcomes. Let’s remember the compensation caps at AFCA are now significant and determinations can have major impacts on claimants financial future.

Without an expert witness protocol akin to PNVCAT2, AFCA risks relying on expert reports that may be subtly—or overtly—biased. Insurers, equipped with deeper pockets and long-standing relationships with “preferred” experts can dominate the evidentiary field, leaving complainants at a procedural disadvantage.

So, what would an AFCA-specific practice note look like? It should include as a start:

• An overriding duty of independence, making clear that expert witnesses owe their primary responsibility to AFCA, not to the party that engaged them.
• Mandatory declarations of independence, similar to those used in courts and tribunals, where the expert affirms they understand their duty to be impartial.
• Transparency of instructions, so that both parties can review what information was provided to the expert when forming their opinion.
• An overview of the experts expertise and qualifications to opine on the relevant issues.

Embedding such a protocol into AFCA’s framework would not only enhance procedural fairness but also improve public confidence in the integrity of its determinations.

As the volume, size and complexity of insurance disputes continue to grow, now is the time for AFCA to adopt an expert witness practice note. It’s a move that would reinforce its commitment to fairness, transparency, and justice—principles that should never be negotiable.

This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

Tagged as:

• regulatory compliance
• property disputes