The top five complaints received were in relation to the interpretation of product terms and conditions (a new entry to the top five), service quality, failure to follow instructions/agreement, failure to act in client’s best interest and inappropriate advice, totalling to 2,078 complaints lodged in 2022, from 2,062 in the previous year.
Disputes with banks, insurers, super funds, investment firms and financial advisers have resulted in a total of 72,358 complaints lodged with the AFCA over the last year, showing a rise of 3 per cent from the previous financial year. However, there was a drop of 5 per cent of lodged complaints against licensed financial firms during that same period.
Complaints brought on by natural disasters such as floods have almost doubled over the last 12 months, rising from 653 to 1,586 complaints.
David Locke, AFCA’s chief ombudsman, said there has been a sharp rise in complaints about general insurance during a period that included an earthquake in Victoria last September, followed by the catastrophic storms and flooding across southern states last October as well as South-East Queensland / Northern NSW at the beginning of 2022.
Home building, home contents and motor vehicle insurance were key issues in regards to delays in claims handling.
“We acknowledge that insurers face challenges as they try to manage claims and get people back on their feet.”
“We know there are significant issues with the supply of things like building materials, parts and labour because of national and global events outside their control,” Mr Locke said.
Mr Locke continued by stating despite the challenges facing insurers, they are still “concerned at the rise in complaints being escalated to AFCA,” and they would like to better understand the cause of complaints in order to resolve disputes quickly and prevent them from happening altogether.
He further remarked that he was “pleased” to see that at least half of the complaints that reached the AFCA were resolved quickly and at the earliest stage of its process, with 67 per cent of complaints being resolved via agreements between the parties.
The 30 June preliminary data “snapshot” revealed that credit cards topped the list of most complained about product in 2021-22, making up 13 per cent of all complaints, however, complaints were down 8 per cent on the pervious year despite topping the list for another year.
NSW had the highest number of complaints lodged, with 23,200 over 2021-22, closely followed by Victoria with 20,988 complaints.
Successful complaints over 2021-22 through the AFCA secured more than $207.73 million in refunds and compensation with an additional $18 million in remediation payments to consumers after the AFCA’s investigations into a range of systemic issues.
Of the 72,358 complaints received, 71,152 were closed.
I’m trying to get my head around this.
2,000 complaints against 20,000 auth reps (rounded up to nearest ‘000).
This means that 10%/1 in 10 auth reps had a complaint go to AFCA last year.
This seems very high?
No; this actually means that there were 2,000 complaints averaging out at 1 complaint per 10 advisers. The implication is that at least 9/10 advisers have not had a complaint. In fact it is very likely that some advisers would have had multiple complaints and 29/30 advisers would have been complaint free during the period.
So we represent 2.87% of all complaints and yet bear the burden of almost 100% of the regulatory changes??!!!
The one that stands out is Service Quality. Surely this is code for they took my money, but didn’t do anything for me. Why can’t the industry get over the fact we can’t charge people and not deliver a service.
I am onboarding new clients that were previously with an adviser linked to one of the major institutions. Besides having them hold their super through their own platform and insurance through their own insurer, they charge them $5k a year for the privilege of having a 1 hour meeting with the adviser each year where they get given the new SOA to sign.
They don’t talk about goals. They don’t talk about what their life will look like when they will retire (v shortly). They don’t talk about how to manage their money/super when they retire. No estate planning considerations.
It really makes me question what value an adviser like this is providing.
Did you question the client why they signed up for it in the first place? Perhaps they wanted the prestige and security of a major institution, and were effectively paying for the corporate overhead that stuff costs? The adviser probably didn’t see much of that $5K.
Not to mention they had invested their clients in about 50 different investment options within a platform to make it look like they were doing something even though they collectively performed worse than a similar multi manager
More important than the numbers of complaints is how many actually found an adviser to actually be at fault.
Still trying to define “best interests”. I came across a claim against one adviser recently for $100,000 via AFCA, & if the same complaint had been made against a fund manager (for the same “problem” with a particular share), it would have been thrown out. The key to surviving this debacle is to allocate a healthy annual budget for a switched-on lawyer who can deal with this outfit.