The Australian Financial Complaints Authority (AFCA) has announced that consumers in dispute with financial firms lodged a record 96,987 complaints over the 12 months to 31 June 2023, which is an increase of 34 per cent on the previous financial year.
David Locke, AFCA chief ombudsman and chief executive, said: “We are deeply concerned by the volume of complaints consumers are having to escalate to AFCA.
“It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.”
The number of complaints in relation to the investments and advice sector was up 51 per cent, with consumers making 4,840 complaints, compared with 3,207 in the previous financial year.
However, these figures include 1,726 complaints against Dixon Advisory and 656 foreign exchange-related complaints against Best Leader Markets. Without these outliers, the total would have been 2,458, which would have represented a decrease in complaints of 23 per cent.
The corporate regulator cancelled the AFSL held by Dixon Advisory on 5 April 2023, with the terms obliging the firm to maintain membership of AFCA until 8 April 2024. This means it will continue to be possible to lodge a complaint with AFCA until that time.
Mr Locke added that the impact of financial stress from rising interest rates and costs of living have contributed to the volume of complaints, particularly in the final quarter of FY22–23.
Banking and finance complaints were up 27 per cent to 53,638 in 2022–23, with complaints involving financial difficulty increasing by 9 per cent over the year but up 31 per cent when the June quarter was compared with the same period a year earlier. Home loan and credit card complaints also spiked higher in the final months of the year.
“We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty,” Mr Locke said.
Buy now pay later (BNPL) complaints rose 57 per cent in 2022–23, with Mr Locke noting that people were turning to other forms of credit to manage tight budgets.
“This underlines the importance of the federal government’s plan to regulate BNPL under the National Consumer Credit Act and recent reforms addressing what’s known as ‘payday’ lending,” he said.
Disputes related to personal transaction accounts were up 86 per cent year-on-year, leading to the product now topping the list of most complaints and knocking credit cards off the top spot for the first time.
AFCA said this was in part due to scam-related complaints, which rose 46 per cent last year to 6,048.
“We witness first-hand the human cost of this serious and sophisticated financial crime,” Mr Locke said.
“It’s pleasing to see initiatives by individual banks to combat scams but we would welcome a more consistent approach across the sector.
“AFCA believes there is a need for enforceable standards, to lift the bar on scam prevention and remediation. This will also aid the work we do as an ombudsman service.”
Delays in insurance claim handling, which was up 76 per cent year-on-year, led all consumer complaints to AFCA for FY22–23, with all general insurance complaints up 50 per cent to 27,924.
“We have been raising our concerns about claim delays with insurers for over 12 months now,” Mr Locke said.
“It is disappointing that this continues to be a concern. While we acknowledge the challenges insurers have faced, the bulk of complaints in the past year were not about natural disasters but about regular claims. We would like to see insurers take the necessary steps to ensure fewer policyholders have to take a complaint to AFCA.”
These issues extended to the superannuation sector, with a 136 per cent rise in complaints about claim delays, including the payment of death benefits. Overall, super complaints rose 32 per cent to 6,957.
“We urge fund trustees to closely track the progress of claims and to review outcomes for members,” Mr Locke said.
“Access to this money is vital for people who have lost a loved one or are unable to work. Unnecessary delays and poor communication are distressing.”
In total, there was $253.8 million in compensation and refunds secured by consumers after filing complaints with AFCA, while its broader systemic issues work resulted in firms remediating more than 368,000 people to a total of $75.5 million.
Would love to see stats on claims paid via industry super fund held cover. As these funds have failed to employ sufficient staff to process claims the wait time have escalated. All well and good to talk about low fees when you fail to deliver a crucial service.
I am going through a TPD claim now and it has been declined when the insurer has not requested the relevant medical evidence prior to declining the claim, now almost 8 months since it was lodged, its reopened and the insurer is now requesting information they already have and also information they should have obtained prior to making their decision. I am unable to work and this is causing huge amounts of stress – it is so unfair.