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While financial complaints rose by more than a third in the financial year 2023, home loan grievances were below average after rising by around 10 per cent, according to new AFCA data.
The Australian Financial Complaints Authority (AFCA) has released its FY22–23 complaints results, revealing an “unprecedented” increase in the number of complaints being lodged with the body.
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According to the body, there were 96,987 complaints lodged by consumers to the Australian Financial Complaints Authority (AFCA) in the past 12 months – a rise of about 34 per cent.
AFCA’s results revealed that overall banking and finance complaints rose 27 per cent to 53,648.
There was a monthly record of 11,249 complaints received in March, equivalent to 363 complaints a day.
Releasing the figures yesterday (Thursday), AFCA’s chief ombudsman and chief executive David Locke said the increase in complaints reflected the growing financial stress in the community.
“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,” Mr Locke said.
“We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty.”
Which products receive the greatest increase in complaints?
The segments with the highest percentage increase in complaints were general insurance (with a 50 per cent increase from 18,563 to 27,924) and investments and advice, which rose 51 per cent from 3,207 to 4,840.
AFCA’s preliminary results found that home loan complaints rose by 10 per cent over the year, from 6,439 to 7,096.
However, despite the increase in protestations about home loan products, the complaint figure was lower than the average across the results. (The number of complaints against brokers for FY23 has not yet been released by AFCA.)
For example, complaints for personal transaction accounts increased by 86 per cent, rising from 7,416 to 13,781.
But personal accounts were the most complained-about product in FY23 and marked the first time credit cards have failed to top the list since AFCA’s inception nearly five years ago.
This was partly due to scam-related complaints, which rose 46 per cent last year to 6,048.
AFCA has said one of the reasons for the landmark number of complaints was due to a 46 per cent increase in scam-related grievances up to 6,048.
Mr Locke said the body had witnessed “firsthand the human cost of this serious and sophisticated financial crime”.
“It’s pleasing to see initiatives by individual banks to combat scams but we would welcome a more consistent approach across the sector,” Mr Locke said.
“AFCA believes there is a need for enforceable standards, to lift the bar on scam prevention and remediation.”
More complaints being resolved by agreement
Despite the overall increase in complaints, AFCA found they were being resolved more quickly, with an average time of 69 days for a resolution, down from 72 the previous year.
There was an increase to 71 per cent in complaints being resolved by agreement between the firm and consumer, up from 67 per cent previously.
However, the broking industry had previously raised its concerns about “how it goes about finding these complaints”.
The broking industry has also said AFCA’s propensity to settle was costing small and medium-sized firms with several brokers having told The Adviser that they were urged to pay amounts of around $1,000 to “make a complaint go away”, without an investigation into any wrongdoing being conducted.
Head of policy and legal at the Mortgage and Finance Association (MFAA), Naveen Ahluwalia, recently told AFCA: “Not only does this raise questions of fairness to member firms, as well as issues of precedent in offering a settlement simply to resolve the matter, but may also impact on professional indemnity policies, which are becoming hard for financial firms (particularly small businesses) to obtain and maintain due to the cost.”
[Related: AFCA: A common complaint (pt1)]
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