As at 30 June, the top-five most complained about products in descending order were: personal transaction accounts, credit cards, personal loans, home loans, and online accounts. Photo: AFCA.
It’s been another record year of grievances for the Australian Financial Complaints Authority (AFCA), with a 9 per cent growth in disputes pegged to scams as a key driver.
AFCA is a non-government ombudsman service providing free and independent dispute resolution to individual consumers and small businesses when they are not able to resolve complaints directly with financial firms in banking and finance, insurance, investments and advice, and superannuation.
The ombudsman aims to help the parties reach agreement, but it can issue decisions that are binding on financial firms.
Its latest data snapshot of the 2023-24 financial year found more than 105,000 disputes reaching the service. Chief Ombudsman David Locke said while this increase was not at the scale experienced a year ago (34 per cent), “these record numbers are still too high”.
“We are disappointed we haven’t seen a reduction. Our view is that firms could be resolving more complaints themselves, or preventing them in the first place,” Mr Locke said.
“We continue to take steps to be able to keep up with the increasing demand for our service, but it’s in everyone’s interests that rising complaints are tackled at the source.”
Scam-related complaints rose 81 per cent, averaging 913 a month compared with 504 a month in the previous financial year.
That was reflected in personal transaction accounts being the most complained about product overall, while transactions that customers considered unauthorised were the most common issue in complaints to AFCA in 2023-24.
“We saw scam-related complaints dip a little towards the end of the year, possibly reflecting recent government and industry efforts to prevent and address scams,” Mr Locke said. “Our hope is that this improvement continues in the coming year.”
Mr Locke said AFCA looked forward to the result of the Federal Government’s work on mandatory codes addressing scams.
“Clearer obligations will help us, as an ombudsman service, in resolving complaints about the way a financial firm has handled the fallout from a scam,” he said.
Mr Locke noted that AFCA had started to see instances of sophisticated scam activity in the superannuation sector.
“We urge super fund trustees to review the steps they have in place to protect members from fraud,” he said.
“The fact that scam and unauthorised transaction complaints in super are still low means there’s a window of opportunity for trustees to act so we don’t experience the sorts of issues seen elsewhere.”
Amid higher interest rates and increased costs of living, complaints involving financial difficulty rose 14 per cent, with home loan complaints accounting for one in three of them.
Mr Locke said the fact this number was not even higher could be seen as testament to the impact of laws requiring responsible lending. AFCA has committed to closely monitoring financial difficulty complaints in 2024-25 after raising concerns earlier this year about lenders’ handling of applications for hardship assistance.
“Lenders should respond quickly when people start to experience financial difficulty, providing appropriate support that’s tailored to the individual,” he said. “We don’t want to see complaints where a once-salvageable situation has become dire.”
On top of scams, there was a surge in complaints about comprehensive motor vehicle insurance, which contributed to record complaints in the banking (11 per cent), finance (11 per cent) and general insurance (4 per cent) sectors.
A 21 per cent surge in complaints about comprehensive motor vehicle insurance meant it overtook home building cover as the most complained about insurance product in 2023-24. Claim delays accounted for a third of these vehicle insurance complaints, and delay in claim handling remained the top issue in general insurance overall.
Mr Locke said that while the rate of increase in general insurance complaints had moderated in 2023-24 – after jumping 50 per cent the previous year – complaints for this sector were at a record high for the second year running.
“We are disappointed the sector has not yet been able to achieve sustained improvement,” he said.
