Increase in scams and financial difficulty in a cost of living crisis drive record-high complaints to AFCA
AFCA Chief Ombudsman David Locke will unpack the latest trends, challenges and future outlook of financial complaints handling at the 2024 NIBA Convention.
The Australian Financial Complaints Authority (AFCA) has reported another record year of financial complaints, with disputes reaching the ombudsman increasing by 9% to more than 105,000 in the 2023-24 period. This rise in disputes follows an unprecedented 34% jump in the previous year.
"While we haven't seen the scale of increase we experienced a year ago, these record numbers are still too high," said AFCA Chief Ombudsman David Locke, referring to the 105,454 complaints recorded in 2023-24.
"We are disappointed we haven't seen a reduction. Our view is that firms could be resolving more complaints themselves, or preventing them in the first place."
The preliminary data snapshot identified scams as a key driver of the surge and a notable increase in complaints about comprehensive motor vehicle insurance. Banking and finance complaints rose by 11% to 59,636, while general insurance complaints rose by 4% to 29,096.
Scam-related complaints increased dramatically 81% to 10,951 in 2023-24, averaging 913 complaints per month compared to 504 per month in the previous financial year. Personal transaction accounts emerged as the most complained-about product, with unauthorised transactions being the most common issue.
"We saw scam-related complaints dip a little towards the end of the year, possibly reflecting recent government and industry efforts to prevent and address scams," Mr Locke noted.
"Our hope is that this improvement continues in the coming year."
While the general insurance sector saw a moderated rate of complaint increase in 2023-24 compared to the previous year, it still faced record-high complaints. Comprehensive motor vehicle insurance overtook home building cover as the most complained-about insurance product, driven by claim delays, which accounted for a third of these complaints.
Amid higher interest rates and increased living costs, complaints involving financial difficulty rose by 14% to 5,525, with home loan complaints making up a significant portion of these cases.
"Lenders should respond quickly when people start to experience financial difficulty, providing appropriate support that's tailored to the individual," Locke advised. "We don't want to see complaints where a once salvageable situation has become dire."
AFCA will release its full data set in the Annual Review later in the year.
AFCA Chief Ombudsman David Locke will speak at the upcoming 2024 NIBA Convention from 20 to 22 October. He will deliver an in-depth analysis of the latest trends, challenges, and future outlook in handling financial complaints.
Attendees at the insurance broking profession's flagship event will gain valuable insights into the current landscape of financial complaints in Australia, including common issues and challenges faced by both consumers and financial institutions.
Whether you're a Young Professional (under 35), booking as part of a group, or just looking to secure a single seat, you can save thanks to our Early Bird discount!
Secure your seat today by registering for the Convention below.