Financial complaints decline in FY25 but authority 'still receiving far too many'

The Australian Financial Complaints Authority (AFCA) saw a 4 per cent decline in the number of complaints received in FY25, but claims the 100,000-plus figure is still "far too many" despite some encouraging signs of a decline in scam-related complaints.

AFCA chief ombudsman and chief executive officer David Locke says the decline in scam-related complaints to 5,977 contributed to a drop overall in banking and finance complaints - a category that represents more than half the 100,745 total.

The three most complained about financial products overall in FY25 were personal transaction accounts, motor vehicle insurance and credit cards. The top three issues were misleading product or service information, delays in insurance claim handling and service quality.

"The movement is in the right direction, but receiving 100,000 complaints in a year is still unacceptably high," says Locke.

"We’ve now had three years of high complaints. Firms have more work to do to ensure fair responses to complaints are delivered earlier, without people having to take the extra step of coming to us."

He says whilst any decline is positive and the authority welcome the progress made by government and industry to prevent scams, caution should be exercised in interpreting AFCA's scam numbers.

"AFCA currently only sees a small proportion of scam complaints, and towards the end of the financial year we saw an uptick in some scam types that cause great harm," he says.

"The number of scam cases are far too high and behind every case is a consumer who has been traumatised and often suffered life changing impacts.

"We urgently need mandatory industry codes and further action from all to prevent, protect and respond to scams. This evil trade causes so much human harm, and the law and regulatory framework we currently have is not sufficient to address this. Industry should not wait to take action; every day we see the impact of more people affected."

Superannuation complaints were also down by 16 per cent at 6,164, but the second-largest source of complaints - general insurance - saw a 17 per cent surge to 34,231.

Locke explains this was mainly due to a surge of complaints about add-on insurance, clarifying that overall the insurance industry has made progress on reducing high complaint numbers.

However comprehensive vehicle insurance was again the most complained about insurance product.

"Delays in motor vehicle insurance claims are increasingly driven by industry-wide shortages in parts and skilled labour," Locke says.

"To maintain trust, insurers must effectively communicate these challenges transparently and proactively, helping customers navigate the wait with clarity and confidence."

Meanwhile, a string of failures including United Global Capital, Shield Master Fund, First Guardian Master Fund, and Brite Advisors PL contributed to an 18 per cent jump in complaints about investments and advice to 4,193.

There was an allied 95 per cent rise in complaints involving self-managed super funds (SMSF) to 1,323 complaints, accounting for a third of complaints in investments and advice. Complaints alleging failure to act in the client’s best interest rose 124 per cent to 1,266.

"What we’re seeing in complaints is a clear pattern of conflicted advice models and the inappropriate use of self-managed super funds that ultimately isn’t in the customer’s best interest," Locke says.

"This only highlights the need for the Compensation Scheme of Last Resort for victims of unlawful advice."

Since starting operations, AFCA has received about 570,000 complaints, helping to secure $1.8 billion in compensation or refunds for consumers.

In addition, AFCA’s systemic issues work – where it identifies wider issues than a single complaint – has resulted in 5.4 million people receiving more than $392 million.