The Australian Financial Complaints Authority has published its annual review for 2024-25, highlighting concerns over resolution disputes. Photo: Stock.
Banks and other financial institutions failing to respond to their customers’ requests for assistance ranks high on the list of official complaints to the sector’s non-government ombudsman over the past year.
The complaints data in the Australian Financial Complaints Authority’s (AFCA) Annual Review, published on Thursday (23 October), reveals continuing financial difficulties for many customers, as well as ongoing concerns over how banking firms resolve disputes.
In the 2024–25 financial year, and for the second year in a row, AFCA has received more than 100,000 complaints.
AFCA’s chief ombudsman and chief executive officer, David Locke, said financial firms need to be committed to resolving customer issues.
“We know many Australians continue to feel financially stretched and stressed, and behind every complaint we receive is a person seeking fairness and resolution in a time of uncertainty,” he said.
“In times of economic pressure, it’s critical that financial firms strengthen their internal dispute resolution processes and ensure resources are available to deal with disputes in a fair and timely manner.”
The financial year saw banking and finance complaints remain the largest complaint type, accounting for 54 per cent of all complaints.
Despite a 17 per cent drop in financial difficulty complaints overall, “failure to respond to a request for assistance” remained in the top five complaint types for the sector.
“We’re calling on all financial firms to stay committed to early resolution and proactive engagement with their customers, particularly those experiencing financial hardship,” Mr Locke said.
“We know more and more families are experiencing hardship due to cost-of-living pressures, and we urge financial firms to genuinely consider these requests with fairness and compassion.
“Our complaints data points to systemic issues in advice models, particularly where conflicts of interest and inappropriate use of SMSFs are involved.
“This underscores the importance of the Compensation Scheme of Last Resort to ensure consumers have access to redress when financial advice fails to be in their best interest.”
Large-scale collapses in the financial advice sector continue to result in high volumes of complaints against advisers and financial advice firms.
Those complaints were up 18 per cent in 2024-25 from the previous financial year.
Self-managed superannuation fund complaints significantly increased by 95 per cent, and “failure to act in the client’s best interest” complaints jumped by 124 per cent.
The financial year expanded AFCA’s jurisdiction to include Buy Now Pay Later (BNPL) providers.
In 2024–25, AFCA received 2099 complaints about BNPL products, with the most common issues being credit enquiries, unauthorised transactions and service quality.
“BNPL products continue to be popular with Australians, especially younger Australians, and we are watching this sector with interest,” Mr Locke said.
“As providers fulfil their credit license obligations, we expect to see new complaint types emerge, including responsible lending and credit reporting concerns.”
AFCA received 34,231 general insurance complaints, a 17 per cent increase from last year, driven by add-on insurance complaints.
Excluding add-on insurance, general insurance complaints remained consistent with the last two years.
The ombudsman said persistently high volumes of complaints about general insurance demonstrate that the sector has more to do to prevent complaints reaching AFCA.
This is particularly the case where escalation could have been avoided if the issue was simply a claim delay.
Proactive, clear communication with customers is often what prevents a complaint from being escalated in the first place.
AFCA provides free, fair and independent help with financial disputes.
It services consumers and small businesses with disputes against their financial firm, covering banking, credit, insurance, advice, investments, or superannuation.
Where an agreement cannot be reached between the parties, AFCA can issue binding decisions.
Original Article published by Chris Johnson on Region Canberra.
