AFCA hears record complaints in 2022-23

Yasmine Raso

Senior Journalist, Financial Newswire

28 July 2023

The Australian Financial Complaints Authority (AFCA) has seen a record rise in the number of consumer complaints lodged against financial firms in the past 12 months, climbing 34 per cent from the previous financial year.

AFCA’s Chief Ombudsman and Chief Executive Officer, David Locke, said the complaints reflected consumers’ experiences of financial stress due to rising interest rates, costs of living and insurance claims especially in the final quarter of the 2022-23 financial year.

The data from AFCA showed general insurance complaints were up 50 per cent to 27,924, banking and finance complaints up by 27 per cent to 53,638, superannuation complaints up by 32 per cent to 6,957, investments and advice complaints up by 51 per cent to 4,840 and life insurance down by 24 per cent to 1,898.

However, the authority also found that of the 4,840 complaints in the investments and advice segment, 1,726 were specifically related to Dixon Advisory and 656 were regarding Best Leader Markets. Without these complaints, the total would have been 2,458 and would have decreased by 23 per cent compared to the previous financial year.

“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. We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty.”

The top issue raised to AFCA was the delay in insurance claim handling, which saw an increase of 76 per cent from the previous financial year. Within superannuation this issue surged 136 per cent when compared to the same period, with the payment of death benefits flagged as a key issue.

“We have been raising our concerns about claim delays with insurers for over 12 months now,” Locke said.

“It is disappointing that this continues to be a concern. While we acknowledge the challenges insurers have faced, the bulk of complaints in the past year were not about natural disasters but about regular claims.

“We would like to see insurers take the necessary steps to ensure fewer policyholders have to take a complaint to AFCA.

“We urge fund trustees to closely track the progress of claims and to review outcomes for members. Access to this money is vital for people who have lost a loved one or are unable to work. Unnecessary delays and poor communication are distressing.”

Within banking and finance, complaints involving financial difficulty were up nine per cent in the year and 31 per cent in the June quarter compared to the previous year, credit card complaints were up 15 per cent to 10,555 and home loans were up by 10 per cent to 7,096.

Personal transaction account disputes also surpassed credit cards as the most complained about product, up by 86 per cent. The first time credit cards did not top the list since 2018, AFCA said this was related to complaints of scams and fraud, which climbed by 46 per cent to 6,048.

AFCA managed to deliver $253.8 million in compensation and refunds for consumers in 2022-23.