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Complaints from Aboriginal and Torres Strait Islander peoples surged by 25 per cent in the past financial year, according to AFCA.
The Australian Financial Complaints Authority (AFCA) has called on the financial services industry to deliver a “stronger response” to the rise in complaints from Aboriginal and Torres Strait Islander peoples.
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During the financial year ending June 2024 (FY24), AFCA received 3,161 complaints from First Nations people, representing a 25 per cent increase from the previous year.
Personal loans were among the three most complained about products, according to the dispute resolution body, along with personal transaction accounts and comprehensive motor vehicle insurance.
Other key issues highlighted by AFCA included unauthorised transactions and delays in insurance claims, with the body noting a “disproportionately high” number of complaints about financial difficulty.
In its release, AFCA recommended that financial firms “enhance their service offerings, particularly by addressing digital exclusion in regional and remote communities” while also suggesting firms could be doing more to improve accessibility and appropriateness of credit services, basic banking, superannuation, and insurance.
Dr June Smith, AFCA deputy chief ombudsman, said the spike in complaints from First Nations people illustrated the importance of and a growing need for more effective and culturally appropriate financial services.
“More First Nations people are engaging with AFCA’s free and fair service for resolving financial complaints. Our data shows however a growing need for more effective and culturally appropriate financial services to ensure they can engage in economic and financial activity,” Smith said
“As complaints rise, so does the need for firms to better understand and serve the unique challenges faced by some communities in accessing even basic services that other Australians take for granted.
“We encourage all financial institutions to reflect on how they are currently engaging with First Nations customers and to make the necessary changes to ensure they are providing genuine, tailored and culturally appropriate assistance.”
AFCA complaints hit record high
These calls come off the back of AFCA reporting a record number of complaints in its annual review for FY24.
During FY24, complaints rose 8 per cent to 104,861, according to AFCA, with complaints in banking and finance accounting for a significant portion of this, rising 12 per cent to 60,076.
AFCA’s data also showed complaints involving financial difficulty rose 18 per cent to 5,715 in the last financial year, with mortgage complaints accounting for almost one in three (1,887).
The complaints resolution body 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.”
[Related: ‘Cookie cutter’ responses don’t address hardship circumstances: AFCA]
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