Complaints to disputes body surge past 100,000

The financial disputes resolution body has warned a continuation of the more than 100k complaints seen in 2023 is unworkable, calling on the sector to clean up its own problems.

Australian Financial Complaints Authority chief ombudsman and CEO David Locke.

The Australian Financial Complaints Authority has warned a surge in complaints past 100,000 cases is “unsustainable”, with scam-related issues exploding.

AFCA said the 23 per cent jump in complaints was leading to a growing list of issues, and it called on the financial sector to do more to avoid conflicts landing before the disputes resolution body.

Revealing the 102,790 complaint tally for 2023, AFCA chief ombudsman David Locke said he was concerned the volume of matters raised by consumers and small businesses was “increasing at an unsustainable rate”.

Mr Locke said AFCA wanted to see a downward trend in new complaints lodged with the body, calling on financial firms to do “better to support their customers and to address complaints quickly and efficiently in-house”.

AFCA was assembled in the lead-up to the banking royal commission in 2018, which found the patchwork of dispute resolution bodies were not delivering good results for consumers.

The Ramsay Review recommended a single scheme be ­established.

2023 showed complaints were “increasing at an unsustainable rate,” according to David Locke.

AFCA was intended to act as a one-stop shop for consumers who had issues they could not resolve with the financial sector.

Mr Locke said AFCA believed “many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA — which is the role we are meant to play”.

“Instead, the volume of complaints reaching us is putting unnecessary pressure on the external dispute resolution system and inevitably causing further delays for consumers,” he said.

Since its establishment, AFCA has seen more than 420,000 complaints lodged.

“The Ramsay and Hayne reports both highlighted the room for improvement. Five years on, our work as an ombudsman service shows that the need for a strong consumer protection framework remains,” Mr Locke said.

AFCA saw a 95 per cent jump in complaints relating to scams in 2023, up to 8987 from 4611 in 2022.

Complaints relating to hardship also surged, climbing 29 per cent to 5396 matters.

This came as consumers were hammered by a string of interest rate rises, pushing up borrowing and repayment costs.

Mr Locke said he hoped anti-scam initiatives from government and industry would “finally disrupt this serious and organised crime”.

“They continue to be of great concern to us. We are also seeing the impact of increased interest rates and cost of living pressures, with complaints involving financial hardship also significantly higher,” Mr Locke said.

AFCA data shows complaints regarding unauthorised transactions topped the tables in 2023, while delays in claims handling came close behind, with both ­issues recording double digit ­increases.

Complaints relating to claim amounts surged 24 per cent in 2023, topping 6447, while denial of claim matters also jumped 50 per cent in the period to 4791.

AFCA can adjudicate on matters raised before the disputes body, making orders for companies to remediate customers with limits on financial redress.

AFCA reported it had secured $304m in compensation and refunds in 2023, up 38 per cent on 2022 levels.

Personal transaction accounts were the most complained-about financial product in 2023, up 64 per cent. Credit cards also saw a surge in complaints, up 33 per cent to 12,124. Complaints about vehicle insurance jumped 39 per cent to 9565, but home building insurance fell 8 per cent to 8073.

AFCA also saw a rush of complaints relating to home loans.