The Financial Ombudsman Service’s annual report for fiscal 2012 was released yesterday, revealing FOS was notified of 36,099 disputes in the year, up 19 per cent on the previous year. FOS cited multiple causes for the increase in complaints including:
- a rising number of households in financial difficulty as a result of the rising cost of living and falling house prices
- the natural disasters that have struck Australia from 2010 to 2012
- the ongoing impact of the ‘global financial crisis’
- growing awareness of FOS in the community
Half of the total number of complaints concerned credit, up 27 per cent from the previous year. More complaints indicates more struggling consumers, and analysts warn that a spike in bad debt is the greatest current threat to bank earnings. The Australian’s Michael Bennet reports a further 42 precent surge in consumer disputes directly with banks and other financial services over the last fiscal year, suggesting the increase in FOS complaints are just a part of a larger picture.
“The continued rise in disputes about financial difficulty suggests that a growing number of Australians are struggling financially and finding it hard to keep up on their payments” said FOS chief ombudsman Shane Tregillis.
The FOS report notes “that many consumers who lodge disputes concerning financial difficulty have made repeated requests for assistance from their financial services provider and have experienced long-term financial difficulty.”
Another cause of the rise in total complaints was a jump in the number of general insurance disputes, which accounted for 29 per cent of all grievances lodged.
While some of these complaints related to the 2010-11 floods in Victoria and Queensland, FOS said they had also seen a jump in the number of standard disputes.
“The work on (insurance) claims related to natural disasters has caused some delays in the processing of other claims”, Mr Tregillis said.
Regarding the general rise in complaints Mr Tregellis said “There needs to be better communication between financial institutions and their customers”, adding “Our focus is for an early and co-operative resolution [of complaints]”.
Among the emerging issues FOS pointed to were credit repair agencies bringing disputes to the FOS and then charging to do so, despite the service being free for consumers.