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Performance measure 4.2: Administration of the Fair Entitlements Guarantee program

Administer the Fair Entitlements Guarantee (FEG) program, including by responding to any increase in claims resulting from the COVID-19 pandemic, to provide financial assistance for workers who have not been fully paid for work done for insolvents or bankrupts.

This performance measure was achieved.

Performance targets

Result

4.2.1 In respect of our administration and services:

  • 80% of claimants are satisfied with the department’s administration of FEG
  • 80% of insolvency practitioners are satisfied with the department’s administration of FEG

ACHIEVED

4.2.2 95% of claim payments are correct 1

ACHIEVED

4.2.3 Timely processing of applications and claims:

  • 80% of claims processed within 16 weeks of receipt of an effective claim
  • average processing time for all initial claims is 14 weeks

ACHIEVED

Source

  • Portfolio Budget Statements 2020–21, Outcome 2, Program 2.1, page 42 and Program 2.2, page 43
  • Corporate Plan 2020–24, page 36

1 95% confidence interval means there is a 95% probability that the true accuracy rate lies between 96.7% and 99.1%.

4.2.1 We use surveys to measure satisfaction with the department’s administration of FEG. These surveys are conducted through an online survey platform. Satisfaction results are calculated as the percentage of respondents who indicate they are ‘satisfied’ or ‘very satisfied’ with the program. ‘Nil’ responses to the satisfaction question are excluded from the calculation.

To determine the level of claimant satisfaction, we send an electronic survey to each claimant approximately 5 weeks after their final claim decision. This timing is based on the premise that claimants are more likely to respond to a survey if they are asked closer to the time when their application is finalised.

In 2020–21, 962 of 5,639 claimants responded to the survey, representing a 16% response rate. Of these, 86% of claimants were satisfied with the department’s administration of FEG. Compared to 2019–20, the response rate decreased by one percentage point, while the level of satisfaction increased slightly (85% satisfied in 2019–20).

To determine the proportion of insolvency practitioners satisfied with the department’s administration of FEG, we send a survey to insolvency practitioners who were involved in cases in the previous 12 months. The survey is sent in mid-May and is open for 6 weeks until the end of June.

In 2020–21, 171 of 968 insolvency practitioners responded to the practitioner survey, representing an 18% response rate. Of these, 89% of insolvency practitioners were satisfied with the department’s administration of FEG, compared to 96% in 2019–20. The response rate remained consistent with the 2019–20 response rate. The 7% drop in satisfaction rate can be partly attributed to the options given to insolvency practitioners to answer the headline satisfaction question. The FEG changed these options in 2020–21 based on the advice given by internal behavioural insights psychologists.

In previous surveys, the options were ‘Very Satisfied’, ‘Satisfied’, ‘Not Sure’, ‘Dissatisfied’ and ‘Very Dissatisfied’. However, in the 2020–21 survey, ‘Not Sure’ was changed to ‘Average’. This prompted a larger number of respondents to select ‘Average’ in 2020–21 (9%) compared to the number of respondents selecting ‘Not Sure’ in 2019–20 (3%).

4.2.2 To determine whether FEG payments are correct, we randomly sample 40 claim decisions each month and test them against 23 criteria to evaluate the accuracy of the decision. During 2020–21, we tested 480 out of 7,635 claim decisions. The claim decision accuracy target was 95% of payments to be correct. In 2020–21:

  • 98.1% (95% CI, +/-1.2 percentage points) of claim decisions tested were accurate (compared to 95% in 2019–20)
  • 1.9% of claim decisions tested were inaccurate.

During the testing we also identify claim decisions that are accurate but show non-compliance with one or more procedural requirements. In 2020–21, 3.8% of claim decisions tested were identified as having a compliance issue, down from 8.2% in 2019–20.

We use this target as a proxy measure for effectiveness as it is essentially a measure of quality. It is important that payments are correct in order to:

  • ensure claimants receive payments to which they are entitled under the program and avoid the need to seek to recover money that was overpaid
  • manage internal business operations (including the need for further training or process improvement)
  • detect potential instances of fraud.

4.2.3 We evaluate the timeliness of claims management processes and our internal benchmarks of 14 and 16 weeks are an indicator of efficiency in claims processing and effective workflow management. For a claim to be effective, it must meet the requirements for lodgement. Data is derived from our internal claims processing system.

The FEG program exceeded both its timeliness measures for 2020–21 with 96% of claims processed within 16 weeks of receipt of an effective claim (compared to 89% in 2019–20) and the average processing time was 13.4 weeks (compared to 8.1 weeks in 2019–20). Taken together with effectiveness measures, the performance results show we are processing FEG claims in a timely manner while maintaining high levels of accuracy and stakeholder satisfaction. The increase in average processing time from 8.1 weeks in 2019–20 to 13.4 weeks in 2020–21 is directly attributable to finalisation of one large case that was initially received in late 2019. This case involved 439 claims that were not finalised until May 2021, after relevant legal processes and complexities were resolved. Excluding this one case, the average processing time for initial claims was 8 weeks.

We use this target as a proxy measure for efficiency. Assessing claims for FEG entitlements involves working with insolvency practitioners and reconstructing employment records. The time it takes to finalise an individual claim depends on a number of issues, including factors outside the department’s control. The Fair Entitlements Guarantee Act 2012 makes FEG not payable where a dividend will be declared within 16 weeks. The 14-week average processing target timeframe reflects an internal priority to reduce the overall processing time for claims.