AFCA facing ‘unsustainable rate’ of complaints

The Australian Financial Complaints Authority (AFCA) received a total of 102,790 complaints from consumers and small businesses in 2023, which was the dispute resolution scheme’s fifth full year in operations.

According to AFCA chief ombudsman and chief executive David Locke, the volume of complaints that are being escalated to AFCA has been increasing at an “unsustainable rate”.

“Scam-related complaints to AFCA have nearly doubled between 2022 and 2023. They continue to be of great concern to us. We are also seeing the impact of increased interest rates and cost-of-living pressures, with complaints involving financial hardship also significantly higher,” Mr Locke said.

The large number of complaints represents an increase of 23 per cent on 2022. The increase in compensation and refunds consumers secured after coming to AFCA reached $304 million, which was up 38 per cent on the previous year.

While scams accounted for 8,987 complaints, which was up 95 per cent from the 4,611 it received in 2022, there were other big movers, such as the 29 per cent jump to 5,396 in complaints involving financial hardship.

AFCA said there were also rises in complaints about other financial products, including banking and finance, insurance, investments and advice, and superannuation, with Mr Locke pointing to better in-house dispute handling as a key to reversing the trend.

“As we head into the new year, our hope for 2024 is that this will be the year that anti-scam initiatives by industry and government finally disrupt this serious and organised crime,” Mr Locke said.

“We also need to see a downward trend in complaints overall, with financial firms working better to support their customers and to address complaints quickly and efficiently in-house.

“We believe many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA – which is the role we are meant to play.

“Instead, the volume of complaints reaching us is putting unnecessary pressure on the external dispute resolution system and inevitably causing further delays for consumers.”

Mr Locke noted that in their final full year, the three schemes that preceded AFCA received 52,000 complaints between them, or roughly half the volume AFCA saw in 2023.

Since starting operations, AFCA said it has received more than 420,000 complaints, helping to secure $1.3 billion in compensation or refunds for consumers.

These figures also represent a significant increase over those reported in November, with the scheme announcing it had received a total of 402,346 complaints and secured $1.18 billion in compensation or refunds for consumers and small businesses over its first five years in operation.

In addition, AFCA’s systemic issues work – where it identifies wider issues than a single complaint – has resulted in 4.9 million people receiving more than $380 million.

“The Ramsay and Hayne reports both highlighted the room for improvement. Five years on, our work as an ombudsman service shows that the need for a strong consumer protection framework remains,” Mr Locke said.