The Australian Financial Complaints Authority (AFCA) was launched on 1 November 2018 following the 2017 Ramsay review, which recommended the establishment of a single scheme to handle disputes formerly handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal.
Over its five years in operation, AFCA said it has received a total of 402,346 complaints and secured $1.18 billion in compensation or refunds for consumers and small businesses.
AFCA added that it has worked with more than 16,500 victims of scams, more than 7,500 people affected by natural disasters (not including COVID-19), and more than 30,000 people experiencing financial difficulty, as well as registering more than 17,000 COVID-related complaints.
It also spruiked its systemic issues work, which resulted in 4.9 million people receiving more than $340 million.
“We have dealt with hundreds of thousands of cases over the past five years, but we are fully aware that behind every complaint is an individual, a family or small business,” AFCA chief executive officer and chief ombudsman David Locke said.
“We know how stressful a financial dispute can be, and how critical it is to help consumers and firms resolve their differences.
“An ombudsman service also plays an important role in supporting public confidence in engaging with the financial services sector, because we are here to help when consumers and firms can’t resolve disputes on their own. We work to contribute to a fair and efficient financial services sector.”
Following a record year in which AFCA received 97,000 complaints during the 2022–23 financial year, which is an increase of 34 per cent on 2021–22.
“Our hope is that, working with firms, we will see a significant improvement in their in-house complaints handling. Consumers shouldn’t have to be escalating this volume of disputes to AFCA,” Mr Locke said.
“While we will always point out areas of concern, to help inform consumers, firms, regulators and government, it’s important for the community to understand that the majority of financial firm members do not generate any complaints,” he added, noting that 70 per cent of member firms have never had a complaint reach AFCA.
The chief ombudsman added that around 60 per cent of cases are resolved in less than 60 days, with 68 per cent of cases resolved by agreement and just 6 per cent requiring a formal decision, which Mr Locke said showed the scheme was a “cheaper and more efficient alternative to a court process for both firms and consumers”.
In October, AFCA reported that inappropriate advice attracted the highest number of investments and advice complaints in financial year 2022–23 at 1,662, up from 241 in the year prior.
Next, with 951 complaints, was failure to follow instructions or agreements (20 per cent) and failure to act in the client’s best interests (534 or 11 per cent).
Overall, 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.
Importantly, the complaints authority highlighted that a recent downward trend in complaints related to investment and advice products would have continued in 2022–23, if not for one-off surges in complaints to AFCA relating to two firms – Dixon Advisory and Best Leader Markets.
