A record 97,000 financial complaints made in 2022-23

The Australian Financial Complaints Authority (AFCA) has been hit with an ‘unprecedented rise’ in complaints as cost-of-living pressures bubble over.

Australians lodged almost 100,000 complaints in the year to June, up 34% on the previous year. 

AFCA Chief Ombudsman David Locke said he was “deeply concerned” about the volume of complaints made.

“It’s not fair on consumers and not good for business. We need to see a significant improvement from firms,” Mr Locke said.

Delays in insurance claim handling topped the list of complaints last financial year, jumping 76% to 10,996 complaints. 

The majority of those complaints had nothing to do with natural disasters, instead, issues such as long waiting times to get vehicles fixed.

Disputes relating to personal transaction accounts rose 86%, and have overtaken credit cards as the most complained about product.

This was fuelled in part by the rise of scam-related complaints, which rose 46% in the year to June to 6,048.

“We witness first-hand the human cost of this serious and sophisticated financial crime,” Mr Locke said.

“It’s pleasing to see initiatives by individual banks to combat scams but we would welcome a more consistent approach across the sector.”

Consumer Action SEO Stephanie Tonkin said banks need to step up, and do more to help customers impacted by scams.

“Scam losses have devastating impacts upon victims, and bank responses are well below community expectations,” Ms Tonkin said.

“We know the major banks only reimburse between 2-5% of their customers’ scam losses.”

Earlier this year, the Albanese Government launched the new National Anti-Scam Centre, a taskforce aimed to prevent Aussies from falling victim to financial scams.

New data gathered by City Index via the ACCC's Scamwatch data, revealed Aussies lost over $150 million to investment scams during the first five months of 2023.

Overall in the 2022-23 financial year, consumers secured $254 million in compensation and refunds after seeking help from the ombudsman.

AFCA Top 5 Complained Issues

Rising interests rates putting pressure on households

AFCA’s complaints data also shows the growing impact of financial stress from the soaring cost-of-living and successive rate hikes.

Complaints involving financial difficulty rose 9% over the year, but were 31% higher in the June quarter this year compared with the same period last year.

Overall, banking and finance disputes rose 27% to 53,638 in 2022-23.

“We want to see banks and other finance providers continue to take active steps to identify and support customers who are experiencing financial difficulty,” Mr Locke said.

Recent data from NAB found of the 570,000 customers the bank has contacted since May 2022, only 14 home loan holders needed a referral to its financial hardship support service.

For those who were referred to the NAB Assist team, more than 90% were back on their feet financially within 90 days.

Buy now, pay later not entirely a saviour 

While BNPL products can be a knight in shining armour for some looking to smooth bills, complaints regarding these products rose 57% over the last year.

Issues relating to late fees and difficult finding hardship policies were the main culprits.

Mr Locke said people have been turning to alternative forms of credit to combat squeezed budgets.

“This underlines the importance of the federal government’s plan to regulate BNPL under the National Consumer Credit Act, and recent reforms addressing what’s known as ‘payday’ lending,” he said.

A recent survey conducted by fintech firm Waave revealed nearly one in three Australians are experiencing psychological stress directly related to BNPL debt.

"When you split purchases into four installments, it’s easy,” Waave CEO and co-founder Ben Zyl told Savings.com.au.

“But then you start getting text messages saying funds will be coming out of your bank account tomorrow.

“That stress can be quite real, particularly when you look at your bank account and maybe you don’t have that money in there.”

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