Australians in dispute with banks, insurers, super funds, investment firms and financial advisers lodged 72,358 complaints with the Australian Financial Complaints Authority (AFCA) in the past 12 months, a rise of 3% on the previous financial year.
Overall, the number of licensed financial firms with a complaint lodged against them was 5% lower than in the previous 12 months at 1,628.
Among the largest financial firms, the Big 4 banks together accounted for nearly 20,000 complaints, a rise of 10%, while the four-largest insurers together accounted for about 9,400 complaints, up 19%.
In the investment and advice space, specifically, the most-common complaints in the investment and advice space related to interpretation of product terms and conditions, service quality, failure to follow instructions, failure to act in clients’ best interest and inappropriate advice.
Complaints about service quality, failure to act in clients’ best interest and inappropriate advice all saw a decline on FY21 while those about failure to follow instructions rose 44%.
There was a decline from 534 to 241 (down 54%) for complaints about inappropriate advice, from 525 to 281 (down 46%) for complaints about failure to act in clients’ best interest and from 674 to 570 ( down 15%) for complaints about service quality.
Interpretation of product terms and conditions was a new entry to the top five with 654 complaints compared to 100 in FY21, but AFCA clarified to Money Management that the rise did not necessarily reflect a trend in financial advice as it was likely related to multiple complaints about the same product.
In the investment and advice space, the number of complaints resolved at an early stage were flat on FY21 at 33% and 45% were resolved by agreement, down from 49%.
Locke said he was pleased to see that, overall, half of all the complaints that reached AFCA were resolved quickly, at the earliest stage of its process. Altogether, 67% of complaints were resolved by agreement between the parties.
Natural disasters
One of the biggest increases in total complaints was generated by natural disasters like floods, with 1,586 complaints being made, more than double the 653 complaints from such disasters the previous year.
AFCA’s chief ombudsman, David Locke, said the national financial ombudsman service had seen a sharp rise in complaints about general insurance in a period that included an earthquake in Victoria last September, then the catastrophic storms and flooding across southern states last October and in south-east Queensland/northern NSW at the start of this year.
Complaints about delays in claims handling were a key issue in home building, home contents and motor vehicle insurance disputes.
“We acknowledge that insurers face challenges as they try to manage claims and get people back on their feet,” Locke said. “We know there are significant issues with the supply of things like building materials, parts and labour because of national and global events outside their control.
“Notwithstanding this, we are concerned at the rise in complaints being escalated to AFCA. We want to better understand the causes of complaints and we’re eager to work with insurers to help them resolve disputes more quickly and, ultimately, to prevent them.”
