This as Aussies struggle with rising interest rates and living costs
A record 96,987 complaints have been lodged with the Australian Financial Complaints Authority (AFCA) in the past 12 months, an unprecedented 34% increase on the previous financial year, as Australians take the hit from surging interest rates and increasing cost-of-living pressures.
David Locke (pictured above), AFCA’s chief ombudsman and CEO, said the increase mirrored the mounting financial stress Australians were experiencing as well as the continued scourge of scams and issues with insurer claims handling that had continued for well over a year now.
“We are deeply concerned by the volume of complaints consumers are having to escalate to AFCA,” Locke said. “It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.”
Overall, banking and finance complaints spiked by 27% to 53,638 in 2022-23. Within that, complaints involving financial difficulty lifted 9% over the year and up 31% when the June quarter was compared to the same period the prior year. Home loan complaints and credit card complaints, too, surged in the final quarter of last year.
“We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty,” Locke said.
The good news is, the proportion of complaints resolved by the banking and financial sector at the earliest stage of the AFCA process had continued to rise.
BNPL (buy now, pay later) complaints swelled by 57% in 2022-23, as more people resorted to other forms of credit to manage tight budgets.
Personal transaction accounts snatched the title as the most-complained-about product from credit cards, with disputes up 86%, partly driven by scam-related complaints, which surged 46% last year to 6,048. It was the first time that credit cards have failed to top the list since AFCA’s inception five years ago.
“We witness firsthand the human cost of this serious and sophisticated financial crime,” Locke said. “It’s pleasing to see initiatives by individual banks to combat scams but we would welcome a more consistent approach across the sector.”
Locke lauded the government proposal for codes of practice addressing scams.
“AFCA believes there is a need for enforceable standards, to lift the bar on scam prevention and remediation. This will also aid the work we do as an ombudsman service,” he said.
Delay in insurance claim handling was the top issue in complaints to AFCA in 2022-23, up 76%. Overall, general insurance complaints grew 50% to 27,924.
Delay in insurance claim handling was also a major issue in superannuation. Super complaints lifted 32% overall, but within that was a 136% increase in complaints about claim delays, including the payment of death benefits, AFCA reported.
In 2022-23, consumers secured a total $253.8 million in compensation and refunds after lodging their complaints with AFCA. Moreover, AFCA’s systemic issues work – on issues with a wider impact than single complaints – led to a total of $75.5 million remediated to more than 368,000 people.
For more information, including a financial sector and state-by-state breakdown, please visit AFCA’s Data Snapshot web page.
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