There has been a 40 per cent increase in complaints lodged against financial institutions since the sector’s new ombudsman, the Australian Financial Complaints Authority (AFCA), commenced operations a year ago.
The ombudsman stated $185 million in compensation had been awarded between 1 November 2018 and 31 October 2019 as a result of complaints received from Australians in dispute with financial firms, such as their bank, insurance provider or super fund.
AFCA chief executive David Locke said: “Every day we continue to hear from people who are dissatisfied with the way their financial firm has handled their complaint. These matters have not been resolved internally by financial firms and so the individual then brings their complaint to AFCA.”
The 73,272 complaints lodged with AFCA during the past 12 months represented a 40 per cent increase compared to the 52,232 complaints received by the three external dispute resolution schemes preceding AFCA during the 2018 financial year.
AFCA confirmed 77 per cent of the complaints received in the past year had been resolved, with the majority taking 60 days or less to resolve.
Seventy per cent of complaints were resolved in favour of the complainant, it added.
“We take our commitment to fairness and independence very seriously, and where possible we encourage the financial firm and complainant to resolve the matter among themselves. The statistics show that this happened, with 70 per cent of all claims resolved in the past 12 months,” Locke said.
“The increase in complaint numbers we are witnessing at AFCA indicates that there is still work to be done by firms to improve their practices and restore public faith in financial firms. AFCA will continue to focus on member engagement to help firms to enhance their own internal dispute resolution procedures.”
Research conducted by AFCA in July revealed only 3 per cent of Australians were aware of the authority. Despite the low level of awareness, Australians were making as many as 200 complaints a day, the ombudsman pointed out.
It noted the financial institutions with the highest number of complaints against them were banks, followed by general insurers.
Credit complaints, insurance claims and financial hardship were the biggest issues, with 11 per cent of complaints made by people experiencing financial difficulty.