Australians in dispute with banks, insurers, super funds, investment firms and financial advisers lodged 72,358 complaints with the Australian Financial Complaints Authority (AFCA) in the past 12 months, a rise of 3 per cent on the previous financial year.
One of the biggest increases was generated by natural disasters like floods, with 1,586 complaints being made, more than double the 653 complaints from such disasters the previous year.
Among the largest financial firms, the top 4 banks together accounted for nearly 20,000 complaints, a rise of nearly 10 per cent, while the top 4 insurers together accounted for about 9,400 complaints, up 19 per cent. Overall, the number of licensed financial firms with a complaint lodged against them was 5% lower than in the previous 12 months.
AFCA’s Chief Ombudsman, David Locke, said the national financial ombudsman service had seen a sharp rise in complaints about general insurance in a period that included an earthquake in Victoria last September, then the catastrophic storms and flooding across southern states last October and in south-east Queensland/northern NSW at the start of this year.
Complaints about delays in claims handling were a key issue in home building, home contents and motor vehicle insurance disputes.
“We acknowledge that insurers face challenges as they try to manage claims and get people back on their feet,” Mr Locke said. “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.
“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.”
Mr Locke said he was pleased to see that, overall, half of all the complaints that reached AFCA were resolved quickly, at the earliest stage of its process. Altogether, 67 per cent of complaints were resolved by agreement between the parties.
The preliminary data “snapshot” as at June 30 shows that credit cards were the most complained about product in 2021-22, accounting for 13 per cent of all complaints. But, despite topping the list for another year, complaints about cards were down 8 per cent on the previous year.
Personal transaction accounts, home loans, home building insurance and motor vehicle insurance rounded out the top 5 most commonly complained about products or services in 2021-22 (for more detail, go to our Data Snapshot).
Financial difficulty-related complaints fell 14 per cent to 4,442, from more than 5,000 the previous year.
“We continued to see lower levels of hardship complaints in 2021-22, reflecting the work that the banking sector has done to support consumers in recent years,” Mr Locke said. “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.”
Overall, in 2021-22, successful complainants secured more than $200 million in compensation and refunds. In addition, AFCA’s investigations into a range of systemic issues resulted in remediation payments to consumers totalling more than $18 million.
AFCA continued to register complaints about ACBF funeral plans in 2021-22, although 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.
Altogether, work on 1,413 complaints had to be paused in 2021-22 because 14 firms were affected by insolvency issues. It is estimated that consumer claims in these complaints total about $195 million.
AFCA has now helped to secure more than $820 million in compensation and refunds since starting operation on 1 November 2018. It has registered more than 270,000 complaints in that time.
For more detail on these and other complaints, along with a state-by-state breakdown, please visit our Data Snapshot.
AFCA will publish its comprehensive Annual Review later this year.
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- The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent help with financial disputes.
- AFCA is a one-stop-shop for consumers and small businesses who have a dispute with their financial firm, over things such as banking, credit, insurance, advice, investments or superannuation.
- Where an agreement cannot be reached between parties, AFCA can issue decisions that are binding on financial firms.