Scams and insurance delays push complaints to record high

If you thought you had a busy 2023, spare a thought for the team at the Australian Financial Complaints Authority (AFCA), who took on a record 102,790 complaints in 2023 – 23% more than in 2022.

AFCA deals with complaints about financial services and products, though it only steps in as a mediator if a resolution can’t be achieved between a consumer or small business and their bank, insurer, or superannuation fund.

Scams notched up the highest growth in the number of complaints – 8987 in 2023, which was nearly double the 2022 number – though AFCA’s chief executive, David Locke, is optimistic that countermeasures being rolled out by financial institutions will help stem the tide.

“As we head into 2024, our hope is that this will be the year that anti-scam initiatives by industry and government finally disrupt this serious and organised crime,” he says. (See Scamwatch, right.)

Many Australians impacted by natural disasters were also clearly left unimpressed by the efforts of their insurers, as complaints related to delays in claim handling (up 20%), claim amounts (up 24%) and denial of claims (up 50%) were among the top five issues of 2023.

The surge in complaints is a sign that firms need to lift their game.

“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,” says Locke.

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

So, where’s the silver lining in all this?

First, 70% of financial firms haven’t had a single complaint lodged against them since AFCA was launched in late 2018.

Second, AFCA says the average amount of time it took to address and close a complaint was 69 days in 2022-23 financial year

– far quicker than its predecessors.

Perhaps most importantly for consumers, AFCA helped secure more than $300 million in compensation and refunds in 2023. Since 2018, the total is close to $1.3 billion.

In a perfect world, there would be no complaints. But it’s clear that AFCA provides a service that is delivering real results for consumers and small businesses and it’s a much-needed one.

To learn more about AFCA, head to the Money website (moneymag. com.au) to read our interview with chief operating officer Justin Untersteiner.