Complaints about financial firms to AFCA skyrocket as thousands of Australians left behind
The Australian Financial Complaints Authority (AFCA) has revealed that consumers in dispute with financial firms lodged a record 96,987 complaints in the past 12 months, an unprecedented rise of 34 per cent on the previous financial year.
Consumer Action CEO Stephanie Tonkin said the big jump in complaints to AFCA about financial service providers is disappointing, but not a surprise.
“The cost-of-living crisis is not the only factor – this massive increase indicates that many financial firms aren’t meeting their legal obligations at a time when customers need their support the most,” she said.
“The 46% increase in scam-related complaints is sadly a standout. Scam losses have devastating impacts upon victims, and bank responses are well below community expectations. We know the major banks only reimburse between 2-5% of their customers’ scam losses. The 69% increase in unauthorised transaction complaints at AFCA similarly represents a significant increase in victims of fraud and scams.”
Complaints about financial firms’ handling of scams disputes are particularly problematic because there are few rules that require banks to prevent scams. As a result, many complaints about scams result in outcomes that are unfair, even when escalated to AFCA.
“We welcome AFCA’s support for industry specific codes of practice to establish clear and meaningful obligations on firms in relation to scams and how banks reimburse customers, and this should start with banks. What we need is a stronger legal framework to ensure banks reimburse customers and this will drive investment in meaningful scams prevention. Currently the law is too weak and effectively blames victims, giving the banks a free pass.”
Ms Tonkin said that the dramatic 57% increase in complaints about buy-now-pay-later (BNPL) is also worrying, but sadly expected as the lax lending habits of BNPL providers are contributing to financial distress and pushing households to the brink.
“The BNPL industry desperately needs proper safe lending laws for their products, or they will continue to cause harm,” she said.
The complaints numbers released also align with Consumer Action’s insurance casework insights that suggest general insurers have inadequately resourced their claims handling departments to deal with the increased rates of claims from extreme weather events.
“These companies have been largely immune from the cost-of-living crisis and are still making handsome profits – there is no excuse for leaving customers who have endured natural disasters and suffered damage to their homes or cars in limbo,” Ms Tonkin said.
ENDS
Media Contact: Mark Pearce Tel :0413 299 567 E:Mark@consumeraction.org.au
