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The financial complaints body handled more than 100,000 issues last year and says increases have become “unsustainable”.
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Complaints to AFCA rise 23% to hit record, scam issues double
09 January 2024
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10 minute read
Complaints to AFCA jumped 23 per cent last year led by a huge increase in disputes over personal transaction accounts along with a doubling of scam issues, the financial complaints body says.
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The CEO of the body said the total number of complaints, which hit a record 102,790, was putting unnecessary pressure on the service and he urged firms to do a better job of handling straightforward issues internally.
“The challenge is that more recently the volume of complaints escalated to AFCA has been increasing at an unsustainable rate,” David Locke said. “We believe many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA – which is the role we are meant to play.”
“Instead, the volume of complaints reaching us is putting unnecessary pressure on the external dispute resolution system and inevitably causing further delays for consumers.”
AFCA said its ombudsman service, which was free for consumers and small business complainants and funded on a user-pays basis by firms, was less costly and more efficient than going to court for both parties. It said 60 per cent of complaints were closed within 60 days.
However, after being established five years ago it was now dealing with double the number of complaints handled by the three bodies it replaced: the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
The top five products generating complaints were personal transaction accounts (up 64 per cent on 2022), credit cards (up 33 per cent), vehicle insurance (up 39 per cent), home building insurance (down 8 per cent) and home loans (up 17 per cent).
The top issues were service quality, delays in handling claims, and unauthorised transactions, which were the leading cause of friction and up 48 per cent on the previous year.
Almost 9,000 complaints involved scams, up 95 per cent.
“Scam-related complaints to AFCA have nearly doubled between 2022 and 2023. They continue to be of great concern to us,” Mr Locke said. “Our hope for 2024 is that this will be the year that anti-scam initiatives by industry and government finally disrupt this serious and organised crime.”
He said the impact of increased interest rates and cost-of-living pressures had driven a rise in complaints relating to financial hardship, which were up 29 per cent.
Consumers had secured $304 million in compensation and refunds after coming to AFCA, which was up 38 per cent on the previous year.
Mr Locke said there remained a need for a strong consumer protection framework with signs of a softening attitude to industry codes of practice.
“We have raised concerns with some industry bodies about proposed changes because we believe we have an important perspective to share on how codes apply in practice.”
But he praised the 70 per cent of financial firms that had generated zero complaints since the AFCA began and said there were signs of progress in the wake of the Hayne Royal Commission into banking, superannuation and financial services, which reported five years ago.
“We have seen complaints to AFCA about financial advisers fall in the wake of Haynes,” Mr Locke said. “Banks did a good job during the pandemic working with people experiencing financial hardship, and we hope they do the same as interest rate rises work their way through.”
“Insurers are now starting to acknowledge they could have done better during significant natural disasters last year, when claim delays generated high numbers of complaints to AFCA.”
Since starting operations, AFCA said it had received more than 420,000 complaints and helped secure $1.3 billion in compensation or refunds for consumers.
In addition, AFCA’s systemic issues work – where it identifies wider issues than a single complaint – has resulted in 4.9 million people receiving more than $380 million.
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