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Five years since the banking royal commission was completed, the number of complaints received through Australia’s new financial dispute resolution scheme has shot past 100,000 for the first time in a calendar year.
According to David Locke, the Chief Ombudsman and CEO of the Australian Financial Complaints Authority (AFCA), the number of complaints received over the past year has risen at an ‘unsustainable rate’.
“Scam-related complaints to AFCA have nearly doubled between 2022 and 2023,” Locke says.
“They continue to be of great concern to us. We are also seeing the impact of increased interest rates and cost of living pressures, with complaints involving financial hardship also significantly higher.”
AFCA has revealed it received 102,790 complaints in 2023 from consumers and small businesses who were unable to resolve disputes directly with their financial firms.
This was up 23 per cent on a year earlier, leading to a 38 per cent increase in compensation and refunds to $304 million.
AFCA was established in the wake of the 2017 banking royal commission, a move that created a single authority to process disputes formerly handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
In their final full year, the three schemes that preceded AFCA received 52,000 complaints between them, or about half the volume that AFCA is now receiving.
AFCA says 8,987 of total complaints received in 2023 related to scams, which was up 95 per cent from 4,611 in 2022. Complaints involving financial hardship totalled 5,396, up 29 per cent on 2022.
The five financial products that created most complaints from consumers were personal transaction accounts (up 64 per cent to 16,028), credit cards (up 33 per cent to 12,124), comprehensive vehicle insurance (up 39 per cent to 9,565), home building insurance (down 8 per cent to 8,073) and home loans (up 17 per cent to 7,461).
“As we head into the new year our hope for 2024 is that this will be the year that anti-scam initiatives by industry and government finally disrupt this serious and organised crime,” says Locke.
“We also need to see a downward trend in complaints overall, with financial firms working better to support their customers and to address complaints quickly and efficiently in-house.
“We believe many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA – which is the role we are meant to play.
“Instead, the volume of complaints reaching us is putting unnecessary pressure on the external dispute resolution system and inevitably causing further delays for consumers.”
Since starting operations, AFCA has received more than 420,000 complaints and it has helped to secure $1.3 billion in compensation or refunds for consumers.
AFCA’s systemic issues work, where it identifies wider issues than a single complaint, also has resulted in 4.9 million people receiving more than $380 million.
“Five years on, our work as an ombudsman service shows that the need for a strong consumer protection framework remains,” says Locke.
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