AFCA chief blasts financial firms as complaints hit record high
Data shows complaints related to financial hardship and insurance handling dominated the reporting period.
The head of the Australian Financial Complaints Authority has blasted the industry as unfair and says it needs to lift its game after consumers lodged a record 97,000 complaints during 2022-23, up by more than a third on the previous year.
“We need to see a significant improvement from firms,” he stressed, “It’s not fair on consumers and not good for business,” Mr Locke said.
“We have been raising our concerns about claim delays with insurers for over 12 months now.”
“While we acknowledge the challenges insurers have faced, the bulk of complaints in the past year were not about natural disasters but about regular claims. We would like to see insurers take the necessary steps to ensure fewer policyholders have to take a complaint to AFCA.”
General insurance complaints rose by 50 per cent from 2021-22, with 7,953 delay-related complaints (up 66 per cent).
Claim delays also plagued superannuation, with AFCA recording a 136 per cent rise in complaints.
Mr Locke said protracted claims related to death benefits was “distressing” and that access to benefits was “vital for people who have lost a loved one or are unable to work.”
There were 53,638 complaints about banking and finance providers, and consumers took the greatest issue with personal transaction accounts, making 13,781 complaints.
This 86 per cent increase from the previous reporting period saw personal transaction accounts overtake credit cards as the financial product consumers complained about the most.
The collapse of wealth manager Dixon Advisory also inflated complaints about investments and advice, accounting for 36 per cent of a total 4,840 complaints.
Other figures painted a picture of the hardship experienced by consumers impacted by consecutive rate hikes in the past year.
AFCA observed a 31 per cent rise in complaints involving financial difficulty during the June quarter when compared to the same period in 2022-23.
Consumers that resorted to buy now, pay later services to manage tighter budgets complained 57 per cent more to AFCA.
“This underlines the importance of the federal government’s plan to regulate BNPL under the National Consumer Credit Act, and recent reforms addressing what’s known as ‘payday’ lending,” Mr Locke said.
The data also suggested that consumers were experiencing more scams than before, with scam-related complaints rising by 46 per cent compared to the previous year.
However, the government’s proposal for codes of practice to address scams could help “lift the bar on scam prevention and remediation,” according to Mr Locke.
“A more consistent approach across the sector…will also aid the work we do as an ombudsman service,” he said.
