AFCA complaints rising but not about financial advice
Complaints about financial advice do not make it into the Top 5 list compiled by the Australian Financial Complaints Authority (AFCA) covering the past financial year.
AFCA has released its data for 2023/24 expressing disappointment at another record year of complaints but, importantly, financial adviser complaints were not listed as an issue.
In fact, the Top 5 complaints areas all fell into the jurisdiction of banks and credit providers being:
Table: 5 most complained about products
| Product | Complaints | Change |
| Personal transaction accounts | 16,365 | +19% |
| Credit cards | 11,841 | +12% |
| Personal loans | 7,660 | +17% |
| Home loans | 6,913 | -3% |
| Online accounts | 2,533 | +33% |
Source: AFCA preliminary data snapshot as at 30 June 2024
AFCA did not provide a financial year break-down for investment and advice, but its data for the last six months of 2023 revealed just 539 complaints, with the vast majority dealing with investment products rather than advice.
Indeed, as at 31 December, last year, AMP Financial Planning, was the only financial advice business mentioned.
Commenting on the outcome, AFCA chief executive and chief ombudsman, David Locke said disputes reaching the ombudsman service rose a further 9% last financial year to more than 105,000.
“While we haven’t seen the scale of increase we experienced a year ago, these record numbers are still too high,” Locke said of the 105,454 complaints in 2023-24. This followed an unprecedented 34% jump in complaints a year earlier.
“We are disappointed we haven’t seen a reduction. Our view is that firms could be resolving more complaints themselves, or preventing them in the first place,” Locke said. “We continue to take steps to be able to keep up with the increasing demand for our service, but it’s in everyone’s interests that rising complaints are tackled at the source.”
The preliminary data snapshot showed scams were a key driver, along with a surge in complaints about comprehensive motor vehicle insurance, contributing to record complaints in the banking and finance and general insurance sectors.
Banking and finance complaints rose 11% to 59,636 and general insurance complaints 45 to 29,096, as of the preliminary snapshot at June 30.
Scam-related complaints rose 81% to 10,951 in 2023-24, averaging 913 a month compared with 504 a month the previous financial year. That was reflected in personal transaction accounts being the most complained about product overall, while transactions that customers considered unauthorised were the most common issue in complaints to AFCA in 2023-24.
While there may not be many complaints about financial advice, AFCA’s high cost, kangaroo court, guilty until proven innocent approach, forces all advisers to go to extreme lengths building defences against potential vexatious claims. This forces up the cost and complexity of advice for consumers, and makes advisers extremely risk averse about which clients and which situations they are prepared to provide assistance for. The end result is consumers are much worse off due to AFCA.
It’s time financial advice had a “single disciplinary body” as recommended in the Royal Commission. Getting rid of AFCA as one of the many current financial advice regulators would be a good start.