What an ombudsman does and when to use one

Nobody enjoys being bounced between a call centre and an online form when something has gone wrong. Maybe Centrelink stopped a payment without explaining why, a phone provider kept charging for a service it never delivered, an insurer sat on a claim for months, or a council knocked back a development application you thought was straightforward.

When that happens, there is a free and independent avenue you may not have considered: an ombudsman. Ombudsmen investigate complaints about government agencies and, in some industries, about private companies. They operate across most of Australian public and commercial life, and complaining to one is often the cheapest and fastest way to get a decision explained, corrected, or compensated.

This guide explains what an ombudsman is, what it can and cannot do, and the situations in which complaining to one is worth your time.

What is an ombudsman?

An ombudsman is an independent person or body that investigates complaints about how an organisation has treated you. The word comes from Swedish and means "representative", but an ombudsman does not represent you. It is impartial: it looks at both sides of the story and forms a view about whether the organisation acted fairly, lawfully and reasonably.

In Australia, ombudsmen are created by statute. The Commonwealth Ombudsman operates under s 5 of the Ombudsman Act 1976 (Cth), which empowers the Ombudsman to investigate action that relates to a matter of administration taken by a government department or authority, either on complaint or on its own initiative. Every state and the Northern Territory has a similar law establishing its own ombudsman.

Nearly every ombudsman shares the same features:

• Free: you do not pay to complain. The Commonwealth Ombudsman describes itself as "free and impartial", and industry schemes such as the Telecommunications Industry Ombudsman and the Australian Financial Complaints Authority are funded by the companies that belong to them, not by complainants.
• Independent: ombudsmen sit outside the organisations they investigate. Industry ombudsmen are independent of both the industry and government.
• Impartial: an ombudsman does not act for you or for the organisation. It will not argue your case, and it will not take the organisation's side. It assesses the merits of the complaint.
• A second look, not a first step: most ombudsmen expect you to have raised the issue with the organisation itself before you come to them.

What does an ombudsman do?

The process is similar across every scheme. You lodge a complaint, usually online or by phone. The ombudsman then assesses whether the complaint is within its jurisdiction, asks you or the organisation for more information, and tries to resolve the dispute. That can mean putting you back in touch with the organisation, facilitating a negotiated outcome, or conducting a formal investigation.

The Commonwealth Ombudsman describes its role as making sure the actions of agencies are fair and responsible, by handling complaints, conducting investigations, performing audits and inspections, and encouraging good administration. It can make recommendations on how a decision or process could be improved, and it can help you make a formal complaint to the agency in the first place. If a complaint is outside its remit, it will refer you to the right complaint-handling body.

What ombudsmen cannot do matters just as much. The Commonwealth Ombudsman is not authorised to investigate action taken by a Minister or by judges. A government ombudsman will not overturn a decision or order an agency to pay you: it investigates and recommends, and while its recommendations carry real weight, they are not court orders. An ombudsman will not act as your lawyer, and most will not deal with a matter that is already before a court or tribunal.

Industry ombudsmen differ in one important way. Schemes such as the Australian Financial Complaints Authority can make decisions that are binding on the company, including awards of compensation. Government ombudsmen investigate and recommend; industry ombudsmen can also decide.

Complaints about Australian Government agencies

If your complaint is about a Commonwealth department or agency, the Commonwealth Ombudsman is your first port of call. Its remit covers Australian Government agencies broadly, including Centrelink, the administrative side of the ATO, immigration, Australia Post, the Australian Federal Police and the defence force.

It also holds specialist roles in particular areas. A Private Health Insurance Ombudsman handles complaints about private health insurers, and a National Student Ombudsman now deals with complaints from higher education students. Complaints about overseas students, VET student loans and the postal industry are also within its specialist remit. The same office performs the role of the ACT Ombudsman, which looks into complaints about ACT Government agencies, so if your issue is with an ACT department the Commonwealth Ombudsman is still your first stop.

Complaints about state government agencies

Each state and the Northern Territory has its own ombudsman for complaints about that state's public sector: planning decisions, licensing, local councils, and state agencies such as police and corrective services. If a state regulator, council or agency treats your business unfairly, for example by refusing a licence renewal without reasons, the state ombudsman is the body that can investigate.

The ACT is the exception, because the Commonwealth Ombudsman performs the ACT Ombudsman role. Everywhere else, your state or territory ombudsman is the one to contact.

Phone and internet disputes: the TIO

The Telecommunications Industry Ombudsman (TIO) is a free and independent dispute resolution service set up in 1993. Telecommunications providers must be members of the scheme and fund it, which is why the service is always free for complainants. It handles complaints from individuals, small businesses and not-for-profits about phone and internet providers, and it also resolves disputes about land access for telecommunications infrastructure.

The TIO can award up to $100,000 in compensation. For non-financial loss such as stress, inconvenience or distress, the maximum award is $1,500, except in privacy breach cases. Its determinations are decisions the provider is obliged to follow.

For a small business, this is often the fastest way to recover money lost to an outage, a connection delay, or a provider charging for services it never supplied. If your own business is a telecommunications provider, membership of the scheme is compulsory, so complaints from your own customers come through this same channel.

Banking, insurance and superannuation: AFCA

The Australian Financial Complaints Authority (AFCA) is the external dispute resolution scheme for the financial services industry. It replaced the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. AFCA considers complaints about credit, finance and loans, insurance, banking deposits and payments, investments and financial advice, and superannuation.

AFCA is free for complainants and independent of the firms it investigates. It is not a government department or a regulator: it is a not-for-profit company limited by guarantee. It does not act for either party, but if a complaint cannot be resolved by agreement, AFCA can make a decision that is binding on the financial firm, including an award of compensation for losses you suffered because of the firm's error or inappropriate conduct. It does not award compensation to punish a firm or impose fines.

Energy and water disputes

If your business is being overbilled for electricity or gas, or you are disputing a charge from a water utility, your state's energy and water ombudsman is the scheme to use. In NSW, the Energy and Water Ombudsman NSW (EWON) is the government-approved dispute resolution scheme for electricity and gas customers and some water customers, and its service is free for consumers and small businesses. Similar schemes operate in the other states and territories.

The pattern is the same as everywhere else: you give the provider a reasonable chance to fix the problem first, then the ombudsman steps in to investigate and resolve the dispute.

Business-to-business disputes: the ASBFEO

The Australian Small Business and Family Enterprise Ombudsman (ASBFEO) was established in 2016 to help small businesses and family enterprises in dispute with other businesses or with Australian Government agencies. It provides information about dispute resolution options, access to mediation, and alternative dispute resolution under industry codes including the Franchising Code of Conduct. It also runs a Tax Concierge Service to help small businesses with ATO disputes.

The ASBFEO does not make binding determinations the way AFCA or the TIO do. Its value is different: it is a free entry point that helps you work out which dispute resolution path suits your situation, and it can convene mediation when you and another business have reached an impasse.

When it is too early for an ombudsman

Before you complain to any ombudsman, you will normally be expected to have raised the issue with the organisation itself and given it a chance to respond. Ombudsmen are a second look, not a first step, and many will send your complaint back if you have not tried. An anonymous complaint is also possible with most schemes, but it limits what the ombudsman can do, because it will often need your permission to share details with the organisation.

There are also situations where an ombudsman is the wrong tool altogether. If you need someone to act for you, to argue your position, or to advise you on your legal rights and remedies, an ombudsman cannot help: that is a lawyer's role. If your dispute is heading to court or a tribunal, or involves a genuine legal claim such as breach of contract, an ombudsman may be unable or unwilling to deal with it.

The good news is that checking costs nothing. Every ombudsman service mentioned in this article is free, and most take complaints online. A five-minute enquiry will normally tell you whether your complaint is within scope and what the likely process is. If it turns out you need legal help, most law firms offer a free initial consultation, so finding out where you stand does not have to cost you anything.

Knowing which ombudsman covers you

Before you pay for legal advice, it is worth asking a simple question: which ombudsman, if any, covers this dispute? The answer tells you whether your complaint is free, quick and within an ombudsman's power, or whether you need a lawyer instead.

For government decisions, the answer is the Commonwealth Ombudsman or your state or territory ombudsman. For phone and internet problems, it is the TIO. For banks, insurers and super funds, it is AFCA. For energy and water, it is your state's energy and water ombudsman. And for disputes between businesses, it is the ASBFEO.

Ombudsmen are free, independent and, for many complaints, surprisingly effective. They investigate rather than advocate, so they suit disputes where you want a fair second look, an explanation, or a correction. When you need someone on your side, with the power to pursue a legal remedy, that is the point at which a lawyer's advice is worth having.