Big four customer complaints drop

The Australian Financial Complaints Authority (AFCA) has released a new analysis of the 70,510 complaints it received in 2020-21. The total was 12 per cent down on the year before.

Banking and finance covered the majority of claims (60 per cent), followed by general insurance (24 per cent), superannuation (7 per cent), investment and advice (6 per cent), and life insurance (2 per cent).

The most complained about product during the year was credit cards, which accounted for 14 per cent, or 9,903 claims. Home loans followed, occupying 9 per cent of complaints (6,400).

Only 16 per cent of AFCA’s 40,760 members had faced complaints during FY21 – compared to 19 per cent the year before.

Banks were the most complained about organisations, logging 26,281 claims – but the segment had 9.5 per cent less year-on-year. Credit providers were the subject of 8,216 complaints, coming in third behind general insurers, with 13,896 claims.

Looking at the big four banks in particular, CBA received 5,815 complaints during FY21, 18 per cent less than the year before.

ANZ recorded 4,122 complaints, down by 11 per cent, while NAB saw 4,144, a decrease of 3 per cent.

Westpac was the only major bank to record a rise in complaints, up by 5 per cent to 3,542 claims.

Notably, the majority of AFCA’s members are small and medium enterprises, with the most common members being mortgage and finance brokers; financial advisers; credit providers and accountants.

Three-quarters (74 per cent) of the body’s members are authorised credit representatives, compared to 26 per cent being firms with Australian Financial Services Licences (AFSLs) and Australian Credit Licences (ACLs).

Brokerages tended to record relatively low numbers of complaints. Former NAB-owned credit licence holder BLSSA had the most during FY21, at 26 claims, while Auscred Services and Aptitude Financial Services both had 12 complaints and Mortgage Choice saw 10 during the year.

Connective Credit Services was the mortgage aggregator listed with the most complaints, but its total came to 24 claims, while Australian Finance Group (AFG) received 19, Finsure had 15, Loan Market had nine and Vow Financial counted five.

$240.5m in compensation and refunds

Overall, more than $240.5 million in compensation and refunds were given through the resolution process to consumers and small businesses, as well as outcomes such as fee waivers, debt forgiveness and apologies.

Further, AFCA investigations into systemic issues resulted in remediation payments to consumers totalling nearly $32 million in the past financial year.

Complaints involving financial difficulty plunged by close to 40 per cent from the previous year. There are 8,303 claims related to COVID-19, compared to 5,013 in the four months at the end of FY19-20.

Around half (56 per cent) of all complaints were resolved in under two months. By six months, 90 per cent of all complaints were resolved.

The average complaint took 88 days to close.

Chief ombudsman and chief executive David Locke noted the majority (70 per cent) of cases were resolved in the early stages of AFCA’s process, with agreements or outcomes in favour of the complainant.

However, when the cases did progress to a formal decision from the ombudsman or adjudicator, it was most likely to be decided to be in the firm’s favour.

AFCA has recorded 15 systemic issues that are currently under investigation, having referred 36 serious contraventions and other breaches to regulators since 1 July last year.

A small portion (5 per cent) of complainants were assisted by a paid representative.

AFCA had used its powers to refuse to continue considering a complaint because of a representative’s conduct on around 200 occasions in 2020-21, moving to work directly with the complainant instead.

“AFCA is working to ensure a small number of paid representatives who are not acting in good faith are prevented from exploiting AFCA’s process, either by delaying matters or by lodging complaints lacking merit,” Mr Locke explained.

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