Too many financial complaints, says Ombudsman
There has been a record number of complaints, but what’s the financial product we hate the most?
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About AFCA
The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent dispute resolution to individual consumers and small businesses when they are not able to resolve complaints directly with financial firms in banking and finance, insurance, investments and advice, and superannuation.
AFCA says it aims to help the parties reach agreement, but it can issue decisions that are binding on financial firms.
More information is available here
While the scale of year-on-year increase has declined, complaints to the Australian Financial Complaints Authority (AFCA) are “still too high”.
That’s the verdict of AFCA CEO and Chief Ombudsman, David Locke, when commenting on the record 105,454 complaints his office fielded in 2023-24.
Scams, everyday banking products, and insurance were consumers’ top grievances.
It was enough for the AFCA to express disappointment at the rise from just over 105,000 complaints in 2023-24. This followed an unprecedented 34% jump in complaints a year earlier.
Mr Locke called on firms to do more to resolve disputes themselves before they were escalated to AFCA’s attention.
“We continue to take steps to be able to keep up with the increasing demand for our service, but it’s in everyone’s interests that rising complaints are tackled at the source,” he said.
The preliminary data snapshot showed scams were a key driver, along with a surge in complaints about comprehensive motor vehicle insurance, which contributed to a record number of complaints in the banking and finance and general insurance sectors.
Banking complaints rose 11 % to 59,636 and general insurance complaints 4% to 29,096. Among basic banking products, complaints about online accounts were up 33%, personal transaction accounts up 19%, and credit cards up 12%.
Scam-related complaints rose 81% to 10,951 in 2023-24, averaging 913 a month compared with 504 a month the previous financial year.
“We saw scam-related complaints dip a little towards the end of the year, possibly reflecting recent government and industry efforts to prevent and address scams,” Mr Locke said. “Our hope is that this improvement continues in the coming year.”
The AFCA hopes Federal Government action, including mandatory codes, will impose clearer obligations and help it resolve complaints about the way a financial firm has handled the fallout from a scam.
The AFCA is alarmed by an increase in sophisticated scam activity in the superannuation sector and is urging super fund trustees to review the steps they have in place to protect members from fraud.
“The fact that scam and unauthorised transaction complaints in super are still low means there’s a window of opportunity for trustees to act so we don’t experience the sorts of issues seen elsewhere,” Mr Locke said.
Complaints for the insurance sector were at a record high for the second year running, even though the rate of increase had moderated in 2023-24 – after jumping 50% the previous year.
That sparked this thinly veiled criticism of the sector by the ombudsman. “We are disappointed the sector has not yet been able to achieve sustained improvement,” he said.
Comprehensive motor vehicle insurance complaints jumped 21%, overtaking home building cover as the most complained about insurance product in 2023-24.
Claim delays accounted for a third of these vehicle insurance complaints, and delays in claim handling remained the top issue in general insurance overall.
Higher interest rates and increased costs of living led to complaints involving financial difficulty, which rose 14%, while home loans accounted for one in three of those complaints.
However, the AFCA warned the sector it would continue to closely monitor financial difficulty complaints, after raising concerns earlier this year about lenders’ handling of applications for hardship assistance.
“Lenders should respond quickly when people start to experience financial difficulty, providing appropriate support that’s tailored to the individual,” Mr Locke said. “We don’t want to see complaints where a once salvageable situation has become dire.”