Financial disputes resolution service, the Australian Financial Complaints Authority (AFCA), received more than 3,800 complaints from small businesses in the FY2022-23 financial year, an increase of nine per cent on the previous financial year.
Unauthorised transactions, a category that includes scam activity, was up 62 per cent in FY2022-23, with SMEs lodging 299 complaints, representing the biggest increase among the top five complaint types.
Service quality remained the top concern among small business complainants. Overall, this category of complaints was down 21 per cent on the previous year, reaching 309 lodgements in total.
Rounding out the rest of the top five complaint types include alleged failures by financial firms to respond to customers’ request for assistance (268 complaints), denials of insurance claims due to an exclusion or condition (225 complaints), and disputes concerning insurance claim amounts (200 complaints).
Business loans were again the most commonly complained about financial product, accounting for about one in three small business complaints received by AFCA.
However, the 1,347 complaints about loans represented a seven per cent fall from the previous year.
Suanne Russell, AFCA’s lead ombudsman for small business, noted that the expected increase in financial difficulty complaints, compounded by a rising interest rate environment and “difficult global and domestic economic conditions”, did not materialise.
“This decrease was not what we were expecting, particularly when we hear of increases in personal and corporate insolvency,” Russell said. “Obviously, this is an area we are watching closely to see if the position changes.
“Small businesses have proven to be incredibly resistant in the aftermath of Covid and in the current economic environment, with increased costs and interest rates,” she added.
The top five products were rounded out by complaints related to business transaction accounts, which increased by 25 per cent to more than 1,000 complaints, commercial property (up 36 per cent to 374 complaints), business credit cards (up 51 per cent to 304 complaints) and commercial vehicles (up 28 per cent to 153 complaints).
Overall, AFCA received a record 96,987 complaints in 2022-23, an unprecedented rise of 34 per cent, with SME complaints representing around four per cent of this total.
However, Russel noted that not all SME lenders are required to be members of the AFCA Scheme, as those who lend only to small businesses do not need an Australian Financial Services Licence nor an Australian Credit Licence and thus are not required to belong to the AFCA scheme.
Small businesses secured $23.4 million from financial firms in compensation and refunds after lodging a complaint with AFCA, up 16 per cent on the $20 million recorded in the previous financial year.