27 September 2023

COVID leads to hike in finance disputes

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The Australian Financial Complaints Authority (AFCA) has received more than 3,100 COVID-19-related complaints since the Coronavirus pandemic was declared in March.

Chief Operating Officer at the AFCA, Justin Untersteiner said 1,430 complaints related to banking and finance (with 680 of these relating to financial difficulty), 1,070 to general insurance and 610 involved superannuation.

“A majority of these complaints have been about loan break costs, disputed transactions, requests to extend payment terms, denial of travel insurance claims, as well as delays in early release of superannuation,” Mr Untersteiner said.

He urged financial firms to provide early, proactive communication with consumers following the increase.

“Many of these complaints result from poor communication, where a consumer has trouble contacting their firm, does not understand their policy, or is confused about the information they receive,” he said.

“To support consumers, we encourage financial firms to ensure their contact details and resources are visible and accessible and allow for genuine engagement with customers to resolve issues early on.”

He said AFCA expected to receive more financial difficulty complaints in the next six to 18 months.

“We expect to see more complaints from vulnerable consumers or others who struggle to repay mortgages or other debts as Government and sector support initiatives come to an end,” Mr Untersteiner said.

“This won’t just be an issue for banking and finance, many will turn to their insurance policies to look for help, and in some cases they will not be covered which will lead to disputes.”

He said that in the June to September quarter he also expected to see an increase in responsible lending complaints, disputes relating to scams, a rise in business interruption insurance complaints, and additional complaints relating to early access to superannuation.

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