Australia’s financial dispute resolution scheme has for the first time recorded 100,000 complaints in a calendar year – just ahead of the fifth anniversary of the Hayne Financial Services Royal Commission.
Australian Financial Complaints Authority (AFCA) chief ombudsman and chief executive David Locke said the volume of complaints escalated to AFCA has been increasing at an unsustainable rate.
“Scam-related complaints to AFCA have nearly doubled between 2022 and 2023. 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,” he said.
In 2023 the Australian Financial Complaints Authority received 102,790 complaints from consumers and small businesses who were unable to resolve disputes directly with their financial firms. This was a jump of 23 per cent on 2022, according to the preliminary data snapshot.
Consumers secured $304 million in compensation and refunds after coming to AFCA, which was up 38 per cent on the previous year.
AFCA registered 8,987 complaints related to scams, up 95 per cent from 4,611 in 2022. Complaints involving financial hardship totalled 5,396, up 29 per cent on 2022.
There were also rises in complaints about other financial products that AFCA covers, which include banking and finance, insurance, investments and advice, and superannuation.
Mr Locke said that as we head into the new year AFCA’s hope for 2024 is that this will be the year that anti-scam initiatives by industry and government finally disrupt this serious and organised crime.
“We also need to see a downward trend in complaints overall, with financial firms working better to support their customers and to address complaints quickly and efficiently in-house. We believe 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,” he said.
“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 noted that in their final full year the three schemes that preceded AFCA received 52,000 complaints between them, about half the volume AFCA is now seeing.
AFCA was set up after the 2017 Ramsay Review recommended establishment of a single scheme to handle disputes formerly handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal. It began work on November 1, 2018, just months ahead of the final report of the Hayne Royal Commission in February 2019.
Since starting operations, AFCA has received more than 420,000 complaints, helping to secure $1.3 billion in compensation or refunds for consumers. In addition, AFCA’s systemic issues work – where it identifies wider issues than a single complaint – has resulted in 4.9 million people receiving more than $380 million.
