Home loans rank third highest
The number of complaints from Australian consumers about financial products is up 3% year-on-year to 72,358, AFCA has confirmed.
AFCA provides free, fair and independent help to consumers and small businesses with financial disputes. The complaints involved banks, insurers, super funds, investment firms and financial advisers.
Releasing complaint figures for the 2021-22 financial year, the non-government ombudsman said overall, the number of licensed financial firms with a complaint lodged against them was 5% lower year-on-year.
AFCA said it received 6,439 complaints about home loans – the third-highest category for complaints. Credit cards recorded the highest number of complaints (9,153), followed by personal transaction accounts (7,416), AFCA’s data snapshot to June 30 shows.
Home building insurance and motor vehicle comprehensive products also made the top five list, at 6,120 and 5791 complaints respectively.
There were 1586 complaints made in relation to natural disasters such as floods – more than double the 653 complaints about disasters the previous year.
Complaints relating to financial difficulty were down 14% to 4,442, but were being monitored, AFCA said.
The big four banks accounted for almost 20,000 complaints, up 10% year-on-year. The top four insurers accounted for around 9,400 complaints, an increase of 19%.
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AFCA chief ombudsman David Locke (pictured above) said AFCA had seen a sharp rise in complaints about general insurance. He acknowledged the reporting period captured the earthquake in Victoria last September, storms and flooding across southern states in October and in southeast Queensland and northern NSW at the start of 2022.
Across home building, home contents and motor vehicle insurance disputes, complaints about delays in claims handling were a key issue, he said.
Locke acknowledged that insurers encountered challenges as they tried to manage claims and get people back on their feet.
“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,” Locke said.
“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.”
Half of all complaints that reached AFCA were resolved quickly, at the earliest stage of its process, Locke said. Overall, 67% of complaints were resolved by agreement between the parties.
Credit cards were the most complained about product over the 2021-22 year, accounting for 13% of all complaints. Despite topping the complaints list for another year, complaints about cards were down 8% on the previous year, AFCA said.
Locke said lower levels of hardship complaints reflected the work undertaken by the banking sector to support customers in recent years.
“That’s really positive. However, we’ll be working with industry and consumer groups as we monitor the impact of cost-of-living pressures and higher interest rates on financial services consumers in the coming year,” he said.
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In the 2021-22 financial year, over $200 million was provided in the form of compensation and refunds to successful complainants, AFCA said. Investigations into a range of systemic issues resulted in remediation payments to consumers of over $18 million.
Complaints about Aboriginal Community Benefit Fund (ACBF) funeral plans continued in 2021-22, although AFCA said it had to pause work on complaints after the four ACBF members of its external dispute resolution service went into liquidation. The number of complaints against the ACBF companies, also known as the “Youpla group”, now exceeds 1,000, AFCA said.
Altogether, work on 1,413 complaints had to be paused in 2021-22 because 14 companies were affected by insolvency issues, AFCA said. It estimates that consumer claims in these complaints were around $195m in total.
Since it started operating on November 1, 2018, AFCA said it had helped to secure over $820 million in compensation and refunds, having registered over 270,000 complaints in that time.
Of the 72,358 complaints received in 2021-22, 71,152 complaints were closed. On average, AFCA said it took 72 days to resolve a complaint.
Almost 70% of complaints were resolved by agreement by the organisation and the consumer, and around half (51%) were resolved at the first stage of its process, when a complaint is referred back to an organisation for further consideration, AFCA said.
AFCA said it would release a further breakdown and analysis of the data in October, as part of its annual review.
