Chief ombudsman speaks about AFCA’s fifth anniversary and the changing nature of consumer disputes
The Australian Financial Complaints Authority (AFCA) recently observed its fifth anniversary during a two-day member forum.
AFCA was created thanks to a 2017 review of Australia's financial dispute resolution system. The review, headed up by Professor Ian Ramsay, recommended the establishment of a single external dispute resolution body to combine the responsibilities of the dispute resolution schemes then in operation.
“The Ramsay Review had concluded that while our predecessor schemes, the Financial Ombudsman Scheme (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT), had done good work, having multiple EDR schemes meant ‘an increased risk of consumer confusion’ and, among other things, a duplication of costs for financial firms,” AFCA CEO and chief ombudsman David Locke (pictured above) said in the forum’s keynote address.
“Of course, bringing these schemes together to form a ‘one-stop-shop; scheme was no easy feat. We faced challenges not just in bringing together our predecessors’ systems and processes but also in raising awareness among consumers and confidence among industry,” Locke said. “Despite a demanding five years shaped by natural disasters, a global pandemic, the rise of scams, and changes in policy, government and reform – I am really proud of what AFCA has achieved and how far we have come.”
“Significant outcomes”
To date, AFCA has handled more than 400,000 complaints from consumers and small businesses, working with more than 4,000 financial firms to help resolve those complaints, Locke said.
“In the last financial year alone, we received nearly 100,000 complaints,” he said. “To put this into context, when the Ramsay Review was established, FOS, the CIO and the SCT were receiving a bit over 41,000 complaints a year in total.”
Read next: Record 97,000 complaints lodged to AFCA in 2022-23
Locke said that AFCA’s systemic issues function has also “achieved significant outcomes.” Since November 2019, AFCA has reported 295 definite systemic issues.
“This work has delivered many positive outcomes to consumers and financial firms alike,” Locke said.
Improved processes
“Of course, resolving disputes is not all we have achieved,” he said. “Because of our proactive and collaborative engagement with industry – and our members’ receptive approach – we have seen many of our members improve practices and embed new processes to ensure fewer complaints occur or are escalated to AFCA in the first place. While volumes are certainly up among some sectors, for several reasons I’d like to thank industry for your efforts over the years.”
Commitment to efficiency
Locke said that despite the increased workload that comes with being a “one-stop shop” for dispute resolution, AFCA strives to handle complaints in a timely way.
“We know the best outcome for everyone is early resolution,” he said. “For consumers, the sooner a matter is resolved the better people are able to put the stress of a complaint behind them, while for our members restoring customer goodwill is simply good for business.”
Over the last five years, AFCA has resolved complaints in an average of 69 days – a speed that Locke said compared favourably with its predecessor schemes and with ombudsman schemes internationally.
Changing nature of complaints
“While the volume of complaints has certainly increased, so too has the nature of the disputes we see – not only in the products and services complained about but also in the response from industry to tackle new challenges and address complex issues,” Locke said. “The Australian community, including our members, has experienced devastating bushfires, floods, the COVID pandemic, rising interest rates and the rise of complex scams and financial crime. These challenges are reflected in our complaints.”
To date, AFCA has worked with more than 7,500 people impacted by weather-related disasters. It also fielded more than 17,000 COVID-related complaints during the pandemic, Locke said.
Locke said that AFCA has also seen fallout from the steep rise in scams, supporting at least 16,500 scam victims to date.
“We continue to work closely with industry, regulators and government to keep our approaches to this dynamic space aligned,” he said. “I know our members, too, are doing a lot of great work in this space, but we will need to do much more to address the issue – including strong, uniform protections for consumers.”
Have something to say about this story? Let us know in the comments below.
