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Mortgages are among the top complaints about banking and finance products, according to ASIC’s inaugural IDR report.
Home loans have been ranked among the top five most complained about banking and finance products in the Australian Securities and Investment Commission’s (ASIC) inaugural internal dispute resolutions (IDR) report.
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The report marks the regulator’s first publication of data gathered under the IDR framework. The framework requires all companies with an Australian credit licence (credit licence) or Australian financial services (AFS) licence to have a procedure that allows customers to make a complaint, which must then be reviewed by the firm.
As of 1 January 2024, companies have been required to submit complaint data to ASIC every six months.
According to the regulator’s first-ever IDR report, there were more than 4.7 million complaints reported by financial firms in the financial year 2024 (1 July 2023 to 30 June 2024), with general insurance products receiving the most complaints (33 per cent), followed by credit products (22 per cent) and deposit-taking products (15 per cent).
Of these complaints, 623,555 (or 13.2 per cent) resulted in a monetary remedy, totalling more than $375 million.
Looking at banking and finance products, home loans were the fourth most complained about banking and finance product for the financial year ending 30 June 2024, with the product responsible for 258,914 complaints.
The highest proportion of home loan complaints (67,472 complaints) came from service issues such as staff behaviour, poor customer experiences, or a promise of communication not received. (The complaints have not been categorised by channel.)
Interest (48,599 complaints), general service delays (34,068 complaints), fees/costs (13,971 complaints), and commercial practice or policy (12,367 complaints) were the next highest contributors.
Home loans also ranked second-highest in the products that received complaints from people regarding financial difficulty and debt collections, with 21,800 complaints (19 per cent), slightly lower than credit cards (27,263 complaints or 24 per cent of this category).
Non-cash systems, where a consumer uses a facility such as online transactions to make a payment, were the most complained about banking and finance product, with 500,987 complaints, followed by credit cards (475,378 complaints), personal transaction accounts (423,445 complaints), and home loans and business transaction accounts (97,444 complaints).
ASIC concerned about quality of reporting
In its first report, ASIC flagged a high level of underreporting and misreporting from companies.
Examples of IDR reporting issues identified by ASIC included large variations in complaint volumes, overuse of vague categories like “other” and “unknown”, missing data on key products or issues, irrelevant information, limited use of available fields, and a high number of firms reporting no complaints.
ASIC said it took no action to ensure the self-reported data reflects financial firms’ underlying handling of complaints when releasing the data, noting that a higher-than-expected 5,035 firms declared no complaints for FY24.
ASIC commissioner Alan Kirkland said the regulator would review the firms that made a nil submission against other datasets, including reports of misconduct from the Australian Complaints Authority (AFCA).
He said it was important for financial firms to foster “a positive complaints management culture” and focus on capturing data that accurately depicts their complaints process.
“The gaps we’ve identified suggest there may be inconsistent IDR reporting practices across the industry,” Kirkland said.
“While there may be reasonable explanations for some of these variances, we encourage firms to carefully review our report and guidance to assist in reporting complete and accurate IDR data.”
Kirkland said the regulator would start publishing data about complaints received by individual firms from next year.
“It is crucial that firms act now to address any gaps in IDR reporting processes, because we will publish the data as it is reported to us,” he said.
AFCA chief ombudsman and CEO, David Locke, commented on the report, saying it provided a path to “a fuller picture of the consumer experience”.
“The publication of this data enhances transparency, giving us a fuller picture of consumer complaints in Australia and enhancing understanding of the complaints environment in financial services,” Locke said.
“We endorse ASIC’s message encouraging firms to foster a positive complaints management culture that delivers quality outcomes for consumers.”
[Related: ASIC to target lenders trying to avoid NCCP]
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