AFCA Systemic issues insights report for 21-22

Logo of Australian Financial Complaints Authority

The Australian Financial Complaints Authority (AFCA) has released its Systemic issues insights report for the 2021-2022 financial year.

AFCA identifies systemic issues that have been raised in a complaint or several complaints, which are likely to affect a class of persons in addition to any person who lodged a complaint or raised a concern.

It must report systemic issues to ASIC, APRA, the ATO, the OAIC or other appropriate body, in accordance with its Rules and its obligations under the Corporations Act 2001 and ASIC Regulatory Guide 267.

In 21-22 a total of 67 systemic issue reports were made across industry sectors: 41 in banking, 11 in general insurance, 4 in life insurance, 2 in investments and advice and 9 in superannuation. In addition, 23 serious contraventions were reported, including 19 refusals or failures by the parties to give effect to an AFCA determination.

AFCA reports that $18,275,607 of refunds were made to consumers, and 167,033 consumers received remediation. Other outcomes included:

  • reinstatement of life insurance policies
  • travel insurance policy premium refunds
  • corrections to consumer credit reports
  • corrections to interest rates applied on home loans, and
  • waiver of annual premium payments.

AFCA identifies the following common risk areas:

  • over-reliance on manual processes;
  • breakdowns when a financial firm retires a legacy IT system and transitions to a new system;
  • processes that run across multiple IT systems and software programs;
  • complaints handling when financial firms have not adequately invested in or resourced their teams to effectively manage complaints at both internal dispute resolution (IDR) and external dispute resolution (EDR) stages.