Financial services complaints rise during coronavirus crisis

Banking and financial groups were the subject of 1430 grievances, of which 680 related to coronavirus financial difficulty.

Financial firms are being encouraged to minimise COVID-19 related disputes by communicating with consumers early.

Banks, insurance and super funds have been rushed with coronavirus-related complaints, with Australia’s Financial Complaints Authority fielding more than 3180 since March 11 and tipping that rate to rise in coming months.

Banking and financial groups were the subject of 1430 grievances, of which 680 related to financial difficulty.

A majority of these complaints related to loan break costs, disputed transactions and requests to extend payment terms.

General insurance accounted for 1070 complaints, of which many related to the denial of travel insurance claims.

Meanwhile, superannuation accounted for 610 complaints, with many account holders protesting delays in processing and release of early access to super.

AFCA chief operating officer Justin Untersteiner, speaking in an online financial forum on Tuesday, said he expected complaints to continue to grow for the next six to 18 months as the economy slumped.

“We expect to see more complaints from vulnerable consumers or others who struggle to repay mortgages or other debts as government and sector support initiatives come to an end,” he said.

“This won’t just be an issue for banking and finance, many will turn to their insurance policies to look for help, and in some cases, they will not be covered which will lead to disputes.”

He said AFCA expected additional complaints to arise from flow-on consequences around the coronavirus.

“We also expect to see an increase in responsible lending complaints, disputes relating to scams, and a rise in business interruption insurance complaints, and additional complaints relating to early access to superannuation from June to September.”

The regulator started tracking COVID-related complaints after the WHO declared it a pandemic on March 11, which triggered pandemic-carve outs in many policies.

Mr Untersteiner urged financial companies to communicate proactively with customers in light of the surge of complaints.

“Many of these complaints result from poor communication, where a consumer has trouble contacting their firm, does not understand their policy, or is confused about the information they receive,” he said.

“We encourage financial firms to minimise COVID-19 related disputes by communicating with consumers early, speaking in plain English, proactively setting customer expectations around delays, reviewing internal dispute resolution processes and regularly engaging with AFCA.”

Consumer Action Law Centre chief executive Gerard Brody said the fact that so many complaints had gone to AFCA was not a ringing endorsement of the finance industry.

“Anyone that has to complain to AFCA to get an outcome from their institution, that’s a problem,” he said.

“It should be the last resort instead of a place where most people end up.”

Mr Brody said it was clear the data only captured the early days of financial complaints and much more was in store.

“Institutions have over 45 days before you can escalate through AFCA,” he said.

“I would expect many complaints would come down the track at the end of the six-month assistance period.”