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The volume of complaints lodged against brokers in the financial year 2023 continues to be nominal, according to new data from the financial complaints body.
The volume of complaints lodged against brokers in FY23 continues to be nominal, according to AFCA.
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The Australian Financial Complaints Authority (AFCA) has released its annual review, detailing the volume and type of complaints it handled over the financial year ended 30 June.
While the body had previously revealed that there were a record 96,987 complaints lodged by consumers in FY23 – a rise of about 34 per cent – new data showed that the number lodged against brokers is nominal.
According to AFCA, there was a 27 per cent rise in banking and finance complaints (53,648), the highest number of complaints in this product area since AFCA commenced operations in 2018–19.
The majority of complaints (36,688) were lodged against banks, with banking and finance complaints largely focusing on personal transaction accounts (26 per cent), credit cards (20 per cent) and home loans (13 per cent). The main issues related to unauthorised transactions and service quality.
However, despite approximately 77 per cent of AFCA’s 44,958 members being credit representatives (and more than 2,000 being mortgage brokers), AFCA’s Datacube revealed that there were just 332 complaints made against the broker channel – representing 0.3 per cent of all complaints.
When solely focusing on mortgage brokers (i.e. excluding finance brokers), this totalled 0.1 per cent.
Which groups received complaints?
According to Datacube – which includes complaints information on members that receive four or more complaints in a year – there were only 75 complaints made against mortgage brokerages.
Of the 53 that went through to case management, the majority were either closed at this stage or were resolved by agreement.
Of the mortgage broking companies, Lendi received the most complaints (20), followed by Mortgage Choice (18) and those under the BLSSA licence – now part of LMG (8).
Only three of the eight complaints that continue through to case management were found in favour of the complainant.
There were 94 complaints lodged against aggregators. Connective received the largest number of complaints (27), followed by Finsure (22) and AFG (19). Of the eight complaints that reached decision stage, half were found in favour of the financial firm.
However, 163 complaints were made against finance brokers – though nearly half (74) focused on novated car leasing through salary packaging.
Of the seven complaints that went through to decision, three of these were found in favour of the complainant.
AFCA noted that business loans continue to be the main product that receives complaints from small businesses (though it also noted an increase in complaints dealing with denial and exclusion of insurance), with an uptick in complaints involving interpretation of loan terms and conditions, expiry and interest rates including claims of incorrect application of rates or representations around rates.
More complaints being resolved early
The AFCA data showed that 65 per cent of the 49,056 closed banking and finance complaints were resolved at the registration and referral stage – up 5,526 or 12.7 per cent from the previous year.
There was a 23 per cent decrease in banking and finance cases that continued through the AFCA process and were closed at the decision stage (when comparing year on year).
According to AFCA, this was testament to “the sector’s investment and focus on proactive complaints management”.
The report read: “While complaint inflows into AFCA remained high, early resolution by the banking sector significantly reduced the proportion of cases needing to be resolved by AFCA.
“As the overall number of complaints continues to increase, it will be important for the industry to maintain this positive focus and resolve complaints early to avoid the need for escalation to AFCA.”
Time taken to close complaints lengthening
However, the annual review has revealed that the time taken to resolve complaints has risen.
The average time to close banking and finance complaints was 57 days in FY23.
A total of 19,021 banking and finance complaints were closed within 30 days, up from 16,759 in 2021–22, however, 1 per cent of these complaints took more than a year to close.
The review found that the average time taken to close small businesses complaints was 112 days, up from 105 last year. The additional time taken to clear cases was “indicative of the increasing complexity of these complaints”, it said.
In total, AFCA resolved 86,185 complaints and awarded $253.8 million in compensation and refunds to consumers and small businesses in FY23.
It also identified more than 1,000 systemic issues and serious contraventions to federal regulators, delivering an additional $100 million in refunds to 378,830 consumers.
You can find out more about the AFCA complaint handling process in the October edition of The Adviser magazine, out now!
[Related: Home loans among fewest complaints: AFCA]
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