Last calendar year saw annual complaints at the Australian Financial Complaints Authority (AFCA) reach more than 100,000 for the first time, driven by scam-related issues.
Some 102,790 complaints were received by AFCA throughout 2023 from consumers and small businesses who were unable to resolve disputes directly with their financial firms.
Representing a rise of 23 per cent from 2022, David Locke, AFCA chief ombudsman and chief executive, expressed his concern for the yearly growth in complaints.
“The volume of complaints escalated to AFCA has been increasing at an unsustainable rate,” he explained.
The three schemes which preceded AFCA saw 52,000 complaints between them in their final year, approximately half the volume the complaints authority is seeing now, Locke observed.
Consumers received $304 million in compensation and refunds once dealing with AFCA, signifying a 38 per cent increase from the previous year.
According to Locke, scam-related complaints to AFCA rose nearly two-fold between 2022 and 2023 and continues to be a key area of focus for the authority.
Nearly 9,000 complaints related to scams were registered by AFCA last year, up by 95 per cent compared to 4,611 in 2022.
The chief ombudsman continued: “We are also seeing the impact of increased interest rates and cost of living pressures, with complaints involving financial hardship also significantly higher.”
Complaints related to financial hardship grew by 29 per cent from 2022 to 5,396 in 2023.
Looking at the top five products complained about during 2023, personal transaction accounts saw the highest number of complaints at 16,028 – a 64 per cent rise.
This was followed by credit cards at 12,124, comprehensive vehicle insurance at 9,565, home building insurance at 8,073 and home loans at 7,461.
Unauthorised transactions topped the list for the top issues complained about last calendar year, receiving 12,289 complaints – up by 48 per cent.
Delays in claim handling followed with 10,692 complaints, as well as service quality with 7,190, claim amount with 6,447 and denial of claim at 4,791.
Locke urged the need for a downward trend in complaints overall and encouraged financial firms to address internal complaints more efficiently.
“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.”
I take this with more than a grain of salt. For me the bigger story is in the moral hazard aspect of unworthy claims being rewarded.
but… but… brokers