The Australian Financial Complaints Authority (AFCA) heard nearly 97,000 complaints last financial year – an “unprecedented” 34 per cent jump in complaints lodged since FY2021-22.
Complaints lodged against the banking and finance sector alone increased by 27 per cent, reaching a total of 53,638 in the 2022-23 financial year. This is up from 42,392 the previous year.
General insurance complaints, while about half the number – at 27,924 complaints – of those lodged against the banking and finance sector, jumped by 50 per cent on the previous year.
While superannuation complaints also rose by 32 per cent (to 6,957), life insurance complaints dropped by 24 per cent to 1,898 – the only sector to see a drop.
Personal transaction accounts overtook credit cards as the most complained about product in 2022-23 – up by a massive 86 per cent, reaching upwards of 13,700 complaints. AFCA noted that it is the first time, since the complaints authority’s inception in 2018, that credit cards (which received 10,555 complaints) were not the most complained about product.
This was partly due to the marked increase in scam-related complaints – up 46 per cent on the previous year – which reached a total of 6,048 complaints last financial year.
AFCA chief ombudsman and chief executive David Locke while acknowledging the various “initiatives by individual banks to combat scams” urged for a “more consistent approach across the sector”.
“AFCA believes there is a need for enforceable standards, to lift the bar on scam prevention and remediation. This will also aid the work we do as an ombudsman service.”
Unauthorised transactions, which include a large portion of scam complaints, also increased by 69 per cent. Reaching a total of 10,840 complaints, this was the second-most complained about issue, coming a close second to claims handling delays (at 10,996 complaints), which also jumped by a whopping 76 per cent, year-on-year.
The ‘unauthorised transactions’ category includes, among others, credit card transactions that are not authorised by the cardholder, the sale of an investment without authority, or ATM withdrawals made with a stolen card, or complaints arising from scams where a customer does not believe they authorised a transaction.
Locke said he was “deeply concerned by the volume of complaints consumers are having to escalate to AFCA”.
“It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.”
Locke said the impact of financial stress from rising interest rates and costs of living became increasingly evident in complaints in the final quarter of 2022-23.
Complaints involving financial difficulty rose 9 per cent over the year. However, AFCA noted, this was up 31 per cent when the June quarter was compared with the same period a year earlier.
“We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty,” Locke said.
Buy now pay later (BNPL) complaints rose 57 per cent in 2022-23, with Locke stressing the “importance of the Federal Government’s plan to regulate BNPL under the National Consumer Credit Act, and recent reforms addressing what’s known as ‘payday’ lending”.
Locke also expressed disappointment in the increase in complaints regarding insurance claim handling delays (up 76 per cent).
“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.”
Overall, AFCA notes that it secured $253.8 million in compensation and refunds for complainants in the 2022/23 financial year.