When digital first means customer last

John Kavanagh

The digital first approach being adopted by banks and other financial institutions is making it harder for customers to access complaints processes, the Australian Financial Complaints Authority says.

AFCA’s latest Systemic Issues Insights Report, covering the six months to December 2023, details 28 systemic issues in banking and finance, 11 in superannuation, six in general insurance, three in investment and advice and one in life insurance.

A systemic issue is one that affects people other than the complainant. In many cases the other people affected may not know there is a problem. AFCA said the matters it investigated during the period resulted in remediation to 139,011 people, worth more than A$40 million.

The ombudsman said compliance with ASIC’s regulatory guide 271, which covers internal dispute resolution, was one of the most common systemic issues it encountered over the period.

In one case, a financial firm moved to a digital first IDR model, removing a telephone service. Customers were required to make written complaints using a form and lodge via mobile app or internet.

RG 271 has enforceable provisions that require a firm to have IDR processes that are accessible, including for people with disability or language difficulties. It also requires firms to have flexible arrangements, with multiple complaint lodgement methods.

AFCA said that soon after the firm changed its IDR process, the ombudsman started to receive complaints from customers who said their experiences dealing with the firm’s IDR were difficult and stressful.

Customers said that when they had issues logging in digitally, they were not able to make phone contact to report problems. Others complained that as their complaint was processed the firm’s system assigned them different complaint reference numbers, which made the process more difficult.

Others said they had to deal with multiple staff on their issue and needed to engage in lengthy email correspondence to explain the issue each time. And some said the responses they received did not address the issue they raised.

In another case, the firm had not allocated sufficient resources to its digital process, with the result that it was repeatedly failing to respond to complaints within the required time.

AFCA said: “Failure to provide helpful, easy to use and accessible complaint processes can lead to increased escalation of complaints to external dispute resolution. This can result in non-compliance with a firm’s obligations.