The Australian Financial Complaints Authority (AFCA) has congratulated the majority of financial firm members for not generating complaints.
The ombudsman has reached five years of operation since commencing in November 2018, where it has now received 402,346 complaints and secured $1.2 billion in compensation and refunds.
Complaints hit a record of 97,000 in the last financial year, underscoring the need for AFCA’s services more than ever.
But David Locke, AFCA chief executive and chief ombudsman, highlighted that 70 per cent of its 46,097 member firms have not had a complaint made against them.
“While we will always point out areas of concern, to help inform consumers, firms, regulators and government, it’s important for the community to understand that the majority of financial firm members do not generate any complaints,” he said.
During its five years, AFCA has worked with over 30,000 people experiencing financial difficulty, more than 16,500 victims of scams and over 7,500 people affected by natural disasters.
It has also registered more than 17,000 COVID-19 related complaints and helped 4.9 million people receive more than $340 million through its systemic issues work.
Locke added: “An ombudsman service also plays an important role in supporting public confidence in engaging with the financial services sector, because we are here to help when consumers and firms can’t resolve disputes on their own. We work to contribute to a fair and efficient financial services sector.
“Our hope is that, working with firms, we will see a significant improvement in their in-house complaints handling. Consumers shouldn’t have to be escalating this volume of disputes to AFCA.”
Additionally, the ombudsman has resolved 60 per cent of cases in less than 60 days over its first five years.
This was mostly by assisting the two parties to reach agreement, with only 6 per cent of cases progressing to a formal decision.
Earlier this month, AFCA opened a consultation into how it determines compensation for complaints for financial advisers, running from 6 November to 1 December.
A new approach document from the organisation will explain existing procedures and the principles behind them when making decisions, apportioning liability and awarding compensation for a loss in investment and advice complaints.
In AFCA’s 2022–23 annual review, it said it received 4,840 complaints about investments and advice but the majority of these came from two specific firms.
If these firms are excluded, AFCA said the number of investment and advice complaints will be 2,466, which is 22 per cent lower than in the previous year and continues a downward trend in complaints.
The number of complaints about inappropriate advice rose from 241 in 2021–22 to over 1,600 in 2022–23, making it the top complaint received by issue, followed by failure to follow instructions and failure to act in clients’ best interest.
Some 38 per cent of complaints are resolved at the registration and referral stage, up from 33 per cent in the previous year. The average time taken to close an investment and advice complaint is 112 days, up slightly from 106 days.
