First Nations People More Than Twice as Likely to Receive Poor Financial Hardship Service

A drawing of a piece of white paper with a pie chart at the top and writing at the bottom, both in blue ink. The background behind the drawing is a light grey with a shadow extending from the page to the bottom right.
An image of a pie chart and writing.

Original media release from CHOICE, by Jarni Blakkarly (29/11/2023).

The number of complaints from First Nations people to the financial services ombudsman rose by 13% last financial year, with scams, delays in insurance claim handling and service quality the most common issues. 

The Australian Financial Complaints Authority (AFCA) received 2523 complaints from Aboriginal or Torres Strait Islander consumers, around 3 percent of the 97,000 complaints received. 

More than one in 10 complaints from First Nations people related to financial hardship, double the one in 20 complaints involving financial hardship from the overall population. 

“The fact that there are more than double the proportion of complaints about hardship among First Nations peoples is of great concern to AFCA and we call on financial firms to do more to address this,” AFCA’s deputy chief ombudsman, Dr June Smith says. 

AFCA says more needs to be done to ensure the ombudsman is accessible to First Nations people.

“We encourage firms to be more proactive about identifying First Nations customers in hardship and working with them to alleviate their financial problems.”

The top five most complained about products by First Nations people were personal bank accounts, personal loans, credit cards, motor vehicle insurance and home building insurance. 

AFCA says while the total number of complaints from First Nations consumers generally mirrors the proportion of the population, more still needs to be done to improve the cultural competency of the service to ensure accessibility to the ombudsman as well as financial inclusion.

Cost of living fuelling complaints

Boandik woman Bettina Cooper is a financial counsellor and strategy lead at Mob Strong Debt Help. She says in the last quarter the service has seen a significant rise in complaints from First Nations people in financial hardship as the cost of living rises. 

“This is reflected in an increase in the number of clients needing help with personal loans and mortgage stress. Referral to AFCA is one of the many tools we use when advocating for First Nations clients to get justice,” she says. 

There are also concerns that financial service providers are mis-selling products and not properly assessing the suitability of loans

She adds that she is concerned about the high number of consumers being impacted by scams and urges financial service providers to be responsive to the often unique challenges faced by First Nations consumers in getting help after they have been scammed. 

She says there are also concerns that financial service providers are mis-selling products and not properly assessing the suitability of loans and that sometimes this may appear in case work as ‘hardship’.

“We hope AFCA is proactive in ensuring that matters raised as hardship are suitably reviewed to ensure that bigger issues are not being mischaracterised as hardship.”

Youpla responsible for over 1000 complaints 

As of 30 June, AFCA says they have received 1346 complaints against the Aboriginal Community Benefit Fund (ACBF) companies, also known as Youpla. 

They have issued 178 decisions against ACBF, all of them in favour of the complainants, finding that the company misled First Nations people by branding themselves as an Aboriginal business when they were not. 

AFCA has ordered ACBF to pay compensation to customers totalling $1.4 million. 

However the company went into liquidation last year and it is unclear how much of the compensation owed to people will be recovered.