The Australian Financial Complaints Authority (AFCA) has seen an alarming surge of 34% in consumer complaints against financial firms, recording an unprecedented 96,987 grievances in the last fiscal year.
The surge in complaints underscores an escalating financial stress within the community, a persistent menace of scams, and ongoing issues with insurance claims handling, as stated by AFCA’s Chief Ombudsman and Chief Executive Officer, David Locke.
“It’s not fair on consumers and not good for business. We need to see a significant improvement from firms,” stated Mr Locke, voicing his concern over the rising complaints brought to AFCA.
The last quarter of 2022-23 saw financial strain escalating due to rising interest rates and the cost of living. Consequently, banking and finance complaints rose by 27% to 53,638. Complaints of financial difficulty specifically increased by 9% over the year and further spiked by 31% when compared with the same quarter of the previous year. Complaints relating to home loans and credit cards also saw a substantial hike in the final months.
Mr Locke urges banks and other finance providers to proactively identify and support customers facing financial hardship, while appreciating the sector’s continued effort to resolve complaints at the earliest stage of the AFCA process.
‘Buy now pay later’ (BNPL) complaints showed a sharp rise of 57% in 2022-23. Mr Locke attributes this to people resorting to other forms of credit to manage their tight budgets, highlighting the need for the federal government’s proposed regulation of BNPL under the National Consumer Credit Act and reforms to address ‘payday’ lending.
Meanwhile, personal transaction accounts have replaced credit cards as the most complained-about product, witnessing an 86% rise in disputes. This is the first time credit cards have been overtaken since AFCA’s inception nearly five years ago. This increase is partly attributed to complaints related to scams, which rose by 46% last year to 6,048.
Mr Locke expresses AFCA’s concerns over the delay in insurance claim handling, which rose by a worrying 76%, making it the top issue in complaints for 2022-23. Superannuation complaints also saw a rise of 32% overall, particularly in relation to claim delays, including the payment of death benefits.
In the past year, consumers secured $253.8 million in compensation and refunds through AFCA, while the Ombudsman’s systemic issues work resulted in firms remediating over 368,000 people with a total of $75.5 million.
Since its inception in November 2018, AFCA has helped secure $1.07 billion in compensation and refunds, receiving over 367,000 complaints. Its systemic issues work has led to 4.8 million people receiving $340.2 million.
AFCA up-to-date data snapshots, click here.
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