Record Number of Financial Complaints for Second Year in a Row

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The Australian Financial Complaints Authority (AFCA) has just released its preliminary data snapshot of financial complaints for 2022-2023, noting a record of 96,987 complaints – an increase of 34% from last year’s record.

Though 71% of the complaints lodged with AFCA were resolved by agreement and 57% were ‘early resolutions’ at registration and referral – an increase of 4% and 6% respectively – the 34% increase in complaints dwarfs the comparatively modest increase in resolutions.

As the past year of consumer financial news suggests the sectors featuring most often in the complaints were insurers – for delay in claim handling, claim amount, and denial due to an exclusion or condition – and banks – largely around unauthorised transactions though home loans also attracted 7,096 complaints, a 10% increase from 2021-2022.

With the single exception of service quality, where complaints dropped by 4% but remained in the 8,000s, all top 5 issues complained about rose by 42-76% with the biggest jumps in unauthorised transactions (69%) and delay in claim handling (76%). Both categories once more lead the chart, breaking into double digits by jumping from the low 6,000s to the high 10,000s.

The jump in insurance is reflective of the stories in the past year relating to flood insurance and the massive 2022 floods, the inquiry recently announced by the Federal Government, and the General Insurance Code Governance Committee’s ‘Thematic Inquiry into Making Better Claims Decisions‘ which found that over half of the insurer-supplied example claims were quickly overturned by the insurers own Internal Dispute Resolution system.

Similarly, the rise in complaints of unauthorised transactions can easily be linked to the sharp increase in scams and the high-profile data security breaches in the past year, leading many to question the current role of banks and what can change in the future to prevent.

Additionally, and besides the rise in cost of living and the associated rise in financial hardship, CHOICE has specifically flagged the 57% increase in complaints relating to buy now, pay later (BNPL) schemes as a key point of concern for consumers and consumer advocates. Eagle-eyed readers of AFCA’s snapshot will also have noticed the high number of motor vehicle insurance complaints which, though not strictly correlated, may be partly associated with lemon cars.

AFCA’s Chief Ombudsman David Locke has expressed his deep concern over the sharp increase in the number of complaints escalated to AFCA and called for a consistent, sector-wide approach to combatting scams and unauthorised transactions.

Sources: AFCA Data Snapshot 2023, CHOICE ‘A record 97,000 Australians complained about financial services last year‘.