Annual Review 2022–23
Contents
- About this Annual Review
- Year at a glance
- Acknowledgement of country
- Board Chair message
- Chief Executive Officer and Chief Ombudsman message
- Organisational overview
- AFCA Independent Review
- Complaints
- Who complained to AFCA?
- Overview of complaints
- Open cases
- Closed cases
- Banking and finance complaints
- Buy now pay later
- Scam complaints
- Financial difficulty complaints
- Small business complaints
- General insurance complaints
- Significant events
- Life insurance complaints
- Superannuation complaints
- Investments and advice complaints
- Cryptocurrency
- Complaints lodged by Aboriginal and Torres Strait Islander peoples
- Complaints lodged by consumer advocates and financial counsellors
- Complaints lodged by paid representatives
- Complaints outside AFCA’s Rules
- AFCA’s Systemic Issues function
- AFCA’s Code compliance and monitoring functiong
- Engagement, awareness and accessibility
- Corporate information
- AFCA General Purpose Financial Report
- Glossary
Between 1 July 2022 and 30 June 2023
Banking and finance complaints received
Percentage of banking and finance complaints resolved at Registration and Referral stage
Top five banking and finance complaints received by product
|
Product |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Personal transaction accounts |
1,819 |
3,815 |
5,758 |
7,416 |
13,781 |
|
Credit cards |
7,112 |
11,628 |
9,903 |
9,153 |
10,555 |
|
Home loans |
4,085 |
7,608 |
6,400 |
6,439 |
7,096 |
|
Personal loans |
3,724 |
5,722 |
5,343 |
5,679 |
6,524 |
|
Electronic banking |
520 |
932 |
1,668 |
2,233 |
2,443 |
Top five banking and finance complaints received by issue
|
Issue |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Unauthorised transactions |
2,839 |
4,915 |
4,878 |
6,174 |
10,614 |
|
Service quality |
1,369 |
3,193 |
4,373 |
5,677 |
5,222 |
|
Financial firms’ failure to respond to request for assistance |
1,740 |
3,123 |
2,735 |
2,753 |
2,813 |
|
Default listing |
N/A ² |
N/A ² |
3,750 |
3,410 |
2,620 |
|
Incorrect fees costs |
1,521 |
2,686 |
2,480 |
2,488 |
2,561 |
Banking and finance complaints closed
Average time to close a banking and finance complaint in days ³
Stage at which banking and finance complaints closed
|
Stage |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
At Registration |
11,699 |
23,439 |
24,388 |
25,293 |
31,751 |
|
At Case Management |
4,548 |
12,891 |
11,779 |
10,622 |
11,043 |
|
At Rules Review |
3,112 |
4,787 |
3,707 |
4,146 |
3,521 |
|
Preliminary Assessment |
574 |
2,503 |
2,341 |
1,751 |
1,421 |
|
Decision |
175 |
1,938 |
2,043 |
1,718 |
1,320 |
Time taken to close banking and finance complaints
|
Time |
2018–19 ¹ |
2019–20 |
2020–21 |
2021–22 |
2022–23 |
|---|---|---|---|---|---|
|
Closed in 0–30 days |
7,965 |
14,837 |
14,018 |
16,759 |
19,021 |
|
Closed in 31–60 days |
7,012 |
15,347 |
13,678 |
13,398 |
16,192 |
|
Closed in 61–180 days |
5,040 |
12,943 |
12,848 |
10,925 |
11,390 |
|
Closed in 181–365 days |
91 |
2,080 |
2,037 |
1,634 |
1,951 |
|
Closed in in more than 365 days |
0 |
351 |
1,677 |
814 |
502 |
¹ AFCA commenced on 1 November 2018. The 2018–19 financial year covers an 8-month period (from 1 Nov 2018 to 30 Jun 2019). Year-on-year changes between 2018–19 and 2019–20 have been calculated pro rata using monthly averages.
² A distinct issue category for default listing didn’t exist before 2020-21.
³ This excludes complaints that were inactive for an extended period, for example complaints that were paused because the financial firm was insolvent or due to court proceedings, and complaints that were previously closed and re-opened.
AFCA can consider complaints about a range of banking and finance products, and services including:
- deposits to current accounts and savings accounts
- banking payment systems including over-the-counter payments, ATM transactions, internet and telephone banking, secure payment systems, direct debits and foreign currency transfers
- credit cards, overdrafts and lines of credit
- buy now pay later arrangements
- consumer leases and hire purchase arrangements
- short-term finance such as payday lending
- home loans, including reverse mortgages
- personal loans such as car loans, holiday loans and debt consolidation loans
- personal investment loans and small business loans
- guarantees.
The types of issues and problems AFCA resolves include:
- incorrect, dishonoured or unauthorised transactions, or mistaken payments
- fees or charges that were incorrectly applied or calculated
- incorrect, misleading or inadequate information about a product or service
- a financial firm’s failure to respond appropriately to a customer in financial difficulty
- decisions made by a financial firm, including whether a decision to lend was made responsibly
- a financial firm’s failure to follow instructions
- a financial firm’s response to reported scam activity
- scams and whether the financial firm made an error when transferring funds
- privacy and confidentiality breaches
- inadequate service, including unreasonable delays or failure to assist a vulnerable customer.
Key insights
- High and increasing EDR complaint numbers in the sector
- However, strong results achieved by financial firms in early resolution of complaints, especially by the major banks
- Increasing transaction-related complaints (including about scams), which are covered in scams
- Continued high levels of service complaints about banking services provided to consumers
- Sustained level of credit reporting complaints, primarily about default listings, credit enquiries and repayment history information. AFCA has been working with firms on the rollout of the financial hardship information component of repayment history information
- Notable increases in complaints around new sources of finance, such as buy now, pay later products
- Early signs of an uplift in financial hardship complaints, including failure by financial firms to respond to requests for hardship assistance. Financial difficulty is covered in financial difficulty complaints.
In 2022–23, AFCA received 53,638 banking and finance complaints. This marks a 27% increase from the previous year and the highest number of complaints in this product area since AFCA commenced operations in 2018–19.
In 2022–23, we closed 49,056 banking and finance complaints – up 5,526, or 12.7%, from the previous year. The average time to close complaints was 57 days.
A welcome trend in these challenging times has been the high number of complaints being resolved at the Registration and Referral stage. Across the 2022–23 financial year, the sector’s investment and focus on proactive complaints management resulted in 65% of closed complaints being resolved at the Registration and Referral stage. While complaint inflows into AFCA remained high, early resolution by the banking sector significantly reduced the proportion of cases needing to be resolved by AFCA. As the overall number of complaints continues to increase, it will be important for the industry to maintain this positive focus and resolve complaints early to avoid the need for escalation to AFCA.
The work of financial counsellors across Australia also continues to provide a strong consumer voice in the complaints ecosystem and has contributed to driving resolutions and ensuring fair outcomes, particularly for vulnerable consumers. AFCA looks forward to continued positive working relationships with both members and consumer advocates in the coming year, as consumers likely face increasingly challenging economic conditions. You can find out more about complaints lodged by financial counsellors and consumer advocates on behalf of consumers here.
In 2022–23, 11,043, or 23%, banking and finance complaints were closed at the Case Management stage. Pleasingly, there was a 23% decrease from last year of banking and finance cases that continued through the AFCA process and were closed at the Decision stage.
High incoming complaints are, however, causing strain at the early stages of the process and in the Rules stage, where some complaints await allocation. As at 30 June 2023, 2,316 complaints were in the Case Management allocation queue, while an additional 1,660 complaints were in the Rules queue. Initiatives are underway across AFCA to address queues and adjust our process to cope with the significantly higher than expected inflows.
Notwithstanding these challenges, for the financial year we closed 19,021 banking and finance complaints within 30 days, up from 16,759 in 2021–22. Only 1% of complaints took more than a year to close.
The top three banking and finance complaints, in descending order, were personal transaction accounts (13,781 or 26%), credit cards (10,555 or 20%) and home loans (7,096 or 13%). Credit products consistently attracted the highest proportion of complaints submitted to AFCA, with credit cards the most complained about. The three most commonly raised issues, in descending order, were unauthorised transactions (including scams) (10,614 or 20%), service quality (5,222 or 10%) and financial firms’ failure to respond to requests for assistance (2,813 or 5%).
Against a backdrop of rising interest rates and cost-of-living pressures, it is not surprising to see increases in complaints relating to financial hardship and financial difficulty, alternative credit or similar products such as buy now pay later, credit reporting, general service and responsible lending. AFCA continues to refine and enhance our approaches to helping members, consumers and their representatives to navigate some of these areas, including through the release for consultation of a draft Responsible Lending Approach on 31 July 2023. We continue to encourage financial firms to address and improve their customer service, especially in relation to hardship by reviewing their approach to special assistance requests.
Banking and finance complaint data includes financial difficulty complaints. For specific information on financial difficulty complaints, please see financial difficulty complaints.
Case study – Access to redraw facilities
Background
In 2006, the complainant arranged a 30-year low-documentation loan that included a redraw feature (but no offset option). The complainant used the redraw feature regularly over many years. In August 2019, when the loan had approximately $21,000 available for redraw, the financial firm declined an attempt by the complainant to redraw $10,000. This occurred a few weeks after the firm had decided, without informing the complainant, to restrict access to the redraw facility. The firm said it made this decision after identifying a class of loans (based partly on their age) that would require up-to-date financial information before further redrawing was permitted.
Defending its actions, the financial firm said the terms and conditions of the loan gave it full discretion over the availability of the redraw facility. The firm also said it needed to review financial information to comply with its responsible lending obligations. There had been no default, previous history of default or arrears, or evidence of financial hardship in relation to the loan.
Outcome
The AFCA decision maker considered all circumstances of the case, including the complainant’s long-term use of redraw without previous issue, and the financial firm’s lack of disclosure at any stage about its redraw discretion since the original loan contract, and terms and conditions issued to the complainant in 2006. The decision maker also considered general community expectations about the accessibility of redraw facilities and the complainant’s previous use of the redraw facility without any objection by the financial firm.
The decision maker concluded that, in the absence of disclosure and reasonable notice to the complainant about the decision to restrict redraw, the financial firm should have reasonably foreseen the risk of the complainant entering into commitments in reliance on redraw – and the resulting risk of hardship and loss. The decision maker found that responsible lending laws do not require a financial firm to complete a fresh credit assessment before allowing a customer to access redraw.
Although the complainant was not able to establish financial loss, on the basis of information provided, the decision maker accepted he suffered significant stress, upset and inconvenience as a result of the financial firm’s conduct and awarded non-financial compensation.
Significance
A financial firm’s right to exercise terms and conditions in a contract is not unfettered. AFCA will consider whether a firm has exercised its discretion in a fair and reasonable manner and in compliance with its other obligations at law. We may consider whether the financial firm provided reasonable notice of the exercise of discretion where it materially impacts a customer. We will also consider any relevant codes and all the circumstances of the complaint, including the impact on a customer of the financial firm’s decision.
Case study – Dealing with domestic violence
Background
The complainant had been with her partner for many years, and said during that time the relationship became abusive. The complainant provided information that her ex-partner was controlling the family’s finances and had been lying about the status of their home loan repayments. By the time the complainant contacted AFCA, she had separated from her partner and sold the home, but the sale did not cover the cost of the loan. The complainant’s parents had used their own home to secure the loan, and it was now at risk.
Outcome
When the complainants contacted AFCA, we considered the complainant was in a vulnerable situation. We set up a conciliation call with the complainant’s financial counsellor and a representative from the bank. After discussing the complainant’s situation and the history of the loan, and with the benefit of new information about the complainant’s situation, the bank decided to waive the remaining shortfall.
