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The financial complaints body received more than 100,000 complaints in a financial year for the first time, setting a new record.
The Australian Financial Complaints Authority (AFCA) has released its annual review for the financial year ending June 2024, revealing that it experienced another record year for complaints in 2023–24.
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According to the body, financial complaints rose 8 per cent over the year to 104,861.
In the financial year 2024, the most complained about products were personal transaction accounts (16,551), followed by credit cards (11,913), motor vehicles (mainly insurance) (10,204), personal loans (7,737), and then home building (7,358).
Overall, the top five issues were:
- Unauthorised transactions
- Delay in handling claim
- Claim amounts
- Service quality
- ‘Other type of scam’
Complaints were particularly high in the banking and finance sector, with complaints about this sector rising 12 per cent to 60,076.
For the second year in a row, there were more complaints about personal transactions (16 per cent) than credit cards (11 per cent). This was largely driven by scam-related complaints that AFCA said grew 81 per cent to 10,928.
When looking purely at the banking and finance complaints, home loans were in fourth place (after personal transaction accounts, credit cards, and personal loans), followed by online accounts.
Of the finance complaints, the main issues related to unauthorised transactions, ‘other type of scam’, interpretation of product terms and conditions, service quality, and incorrect fees/costs.
Insurance complaints also rose again this year (general insurance complaints rose 5 per cent from 27,924 to 29,335) with delays in claim handling being the main subject of complaints (25 per cent).
Financial difficulty and hardship complaints on the rise
AFCA said that amid higher interest rates and increased cost-of-living pressure, complaints involving financial difficulty rose 18 per cent to 5,715 in the last financial year.
Mortgage complaints accounted for one in three of those complaints (1,887).
AFCA wrote in its report that the rise in complaints related to financial hardship was a “significant issue of concern this year”.
Noting that a recent review by ASIC had found that lenders were falling short in financial hardship support and not being proactive enough to offer it, AFCA also said there was “insufficient support by industry for many individuals in financial difficulty”.
“Complaints in this area were up 18 per cent over the past year, with a substantial portion relating to home loans,” AFCA’s report said.
“Many complaints were about failures by lenders to properly respond to, or adequately address, hardship requests. This was more pronounced among smaller lenders and buy now, pay later (BNPL) providers, though there were also issues among larger lenders where, for instance, automated processes can fail to account for individual circumstances.
“We also observed troubling practices such as issuing default notices to consumers who had reached new repayment arrangements. We welcome the steps some lenders have taken, such as investing in specialist hardship teams and improving processes, but the increased number of complaints suggests further work is needed.”
$313m in compensation and refunds
Over the last financial year, AFCA complainants secured $313,903,256 million in compensation and refunds.
The complaints body said that it resolved 104,203 complaints in FY24, 21 per cent more than in FY23.
The majority of complaints were closed before they reached final determination stage, with 72 per cent of these resolved by agreement or in favour of the complainant. Only 2 per cent of the complaints closed before determinations were found in favour of the financial firm.
However, of the 4,281 complaints that did proceed through to final determinations, just 30 per cent were found in favour of the complainant.
AFCA said: “Despite a less dramatic increase than the previous year’s 34 per cent surge, we are still very concerned about the continued high numbers of complaints coming to AFCA.
“AFCA’s services should be reserved for intractable disputes that cannot be resolved between the parties, rather than us handling high volumes of issues around delay and poor service, which financial firms should be resolving themselves.”
[Related: ‘Cookie cutter’ responses don’t address hardship circumstances: AFCA]
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