The Australian Financial Complaints Authority (AFCA) received a total of 102,790 complaints from consumers and small businesses in 2023, which was the dispute resolution scheme’s fifth full year in operations.
According to AFCA chief ombudsman and chief executive David Locke, the volume of complaints that are being escalated to AFCA has been increasing at an “unsustainable rate”.
“Scam-related complaints to AFCA have nearly doubled between 2022 and 2023. They continue to be of great concern to us. We are also seeing the impact of increased interest rates and cost-of-living pressures, with complaints involving financial hardship also significantly higher,” Mr Locke said.
The large number of complaints represents an increase of 23 per cent on 2022. The increase in compensation and refunds consumers secured after coming to AFCA reached $304 million, which was up 38 per cent on the previous year.
While scams accounted for 8,987 complaints, which was up 95 per cent from the 4,611 it received in 2022, there were other big movers, such as the 29 per cent jump to 5,396 in complaints involving financial hardship.
AFCA said there were also rises in complaints about other financial products, including banking and finance, insurance, investments and advice, and superannuation, with Mr Locke pointing to better in-house dispute handling as a key to reversing the trend.
“As we head into the new year, our hope for 2024 is that this will be the year that anti-scam initiatives by industry and government finally disrupt this serious and organised crime,” Mr Locke said.
“We also need to see a downward trend in complaints overall, with financial firms working better to support their customers and to address complaints quickly and efficiently in-house.
“We believe many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA – which is the role we are meant to play.
“Instead, the volume of complaints reaching us is putting unnecessary pressure on the external dispute resolution system and inevitably causing further delays for consumers.”
Mr Locke noted that in their final full year, the three schemes that preceded AFCA received 52,000 complaints between them, or roughly half the volume AFCA saw in 2023.
Since starting operations, AFCA said it has received more than 420,000 complaints, helping to secure $1.3 billion in compensation or refunds for consumers.
These figures also represent a significant increase over those reported in November, with the scheme announcing it had received a total of 402,346 complaints and secured $1.18 billion in compensation or refunds for consumers and small businesses over its first five years in operation.
In addition, AFCA’s systemic issues work – where it identifies wider issues than a single complaint – has resulted in 4.9 million people receiving more than $380 million.
“The Ramsay and Hayne reports both highlighted the room for improvement. Five years on, our work as an ombudsman service shows that the need for a strong consumer protection framework remains,” Mr Locke said.
‘unsustainable rate’ of use. Name a government service that doesn’t suffer the same problem. Health, policing, NDIS, pensions. We consistently elect governments who have never met a problem they think cannot with more money.
AFCA – the self-licking Ice Cream.
You actively encourage people to make frivolous or unreasonable complaints, what do you expect to happen?
Honestly, how is this not a surprise. AFCA actually go out and tell customers to complain – they actively campaign for business. When there is a local disaster (floods, fires, storms etc) they attend community events and tell customers to complain to them if they aren’t getting what they want, when they want it. Oh, it’s not in your contract so your claim has been declined – come to AFCA, oh you’ve had to wait a month because the insurer is doing their best to prioritise the resources they have to make repairs…come to AFCA…. That’s not the purpose of insurance, or AFCA, it’s creating totally unrealistic expectations and its totally unsustainable for the industry…..AFCA costs more = insurance premiums cost more.
Yes, there are genuine complaints and they do help consumers, but it’s all just gone too far. You destroy the industry and there will be no insurance – or it’ll only be accessible to the rich, hows that for protecting your consumers!
So is this article a PR spin to explain some of the recent outrageous illogical decisions by AFCA. Take the Teagle case with Resolution Life, where AFCA paid “compensation” which somehow equaled the TPD benefit, because the insured claimed he was not offered a review of his back exclusion during the life of the policy.
Which raises another moot point: because the “compensation” was not technically a payment of the TPD benefit, does that particular policy continued to exist, if there was no life buyback, assuming of course the premiums continue to be paid. A very interesting legal point which hopefully will be decided on by the judges of the Federal Appeal Court because the far-reaching implications of that particular decision, [b]yet to be published[/b] by AFCA, are somewhat mind-boggling
You cant’ tell people to complain straight to AFCA and then turn around and complain when people complain straight to AFCA,
Nothing like AFCA talking up their book to get increased Govt funding. Prior to the Hayne RC, advisers & life agents dealt with a lot of the consumer complaints that consumers had with the institutions. It’s a complete mess now, in every possible way. When legislation decimates the product service support aspect of advising, the lawyers end up doing it for a far higher price. The lawyers continue to clean up.
That’s an obvious problem when our Big Banks refuse to have decent Online consumer protection and allow $3 Billion to be scammed last year.
Useless Corrupt Canberra with Govt, ASIC & AFCA let the Banks get away with murdering $3 Billion from their clients.
Australian Banks MUST be made to pay like UK banks.
WAKE THE HELL UP CANBERRA AND DO SOMETHING GOOD FOR A CHANGE.
Agree