AFCA chief ombudsman David Locke
The chief financial ombudsman has criticised banks and other financial institutions for failing to deal with customer complaints before they are escalated to the external dispute resolution stage.
The Australian Financial Complaints Authority reported an “unprecedented” 34 per cent increase in complaints lodged with the service in the year to June – a record 96,987 disputes.
Transaction accounts were the most complained about product, with disputes up 86 per cent over the year. AFCA said this reflected the big increase in disputes related to scams.
Buy now, pay later complaints were up 57 per cent and financial difficulty complaints up 31 per cent. Overall, banking and finance complaints rose 27 per cent.
In the insurance sector, the biggest issue was delay in insurance claims handling. Complaints about this rose 76 per cent over the year and general insurance complaints overall rose 50 per cent.
AFCA chief executive David Locke said: “We are deeply concerned by the volume of complaints consumers are having to escalate to AFCA. It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.
“We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty.
Locke said the big increase in BNPL disputes underlined the importance of the government’s move to regulate the product under the Credit Act.
On the issue of scams, Locke said he welcomed moves by individual banks to make their services more secure but added that there was a need for enforceable standards to improve scam prevention and remediation.
AFCA determinations resulted in A$253.8 million of compensation payouts and refunds in 2022/23 and an additional $75.5 million in remediation secured through investigation of systemic issues.