News

Financial Planning, Regulation

AFCA probing systemic issues, serious breaches

The Australian Financial Complaints Authority (AFCA) is currently investigating 84 definite systemic issues and four potential serious contraventions and other breaches, with complaint rates skyrocketing in the body’s first month of operation.

AFCA chief executive and chief ombudsman David Locke said: “Systemic issues are identified in a complaint or several complaints, and have an effect on people beyond the parties to a complaint.

“Financial firms should be in no doubt that we will be referring and reporting these to the appropriate regulator.”

The complaints authority, which began operations on 1 November, also revealed it has noted a 47 per cent increase in complaints received since inception compared to the three predecessor schemes.

It has thus far received 6522 complaints from consumers and small businesses, and averages around 310 complaints per business day.

“This number of calls and complaints is on par with what we were expecting,” Locke said.

“While we have only been operating for a month, 15 per cent of the complaints we received in the month of November have already been finalised.”

Banks were the most complained about provider type, with 2367 complaints, followed by general insurers with 1159 complaints and credit providers with 1040 complaints.

Less than 6 per cent of AFCA’s licensee members had complaints lodged against them in November despite the high number of complaints.

Almost half, 45 per cent, of the complaints AFCA has received have concerned credit, while 21 per cent were about general insurance and 10 per cent were about deposit taking. Only 8 per cent of complaints received were about superannuation.

While most complaints were lodged by individual consumers, 460 complaints were lodged by small businesses.

Complaints about decisions made by financial firms were the most common reason consumers and small businesses contacted AFCA.

Issues included denial of insurance claims and responsible lending, while service issues, such as service quality, delays in claim handling or delays in complaint handling, were the next most common issues.

AFCA replaced the Financial Ombudsman Service, Credit and Investments Ombudsman and Superannuation Complaints Tribunal as the one-stop shop for financial dispute resolution.

It was established after the 2016 Ramsay review into how Australia’s external dispute resolution framework could be improved.

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