The complaints body has awarded $185 million in compensation to consumers in its first 12 months of operation, with complaint figures having risen by 40 per cent.
The Australian Financial Complaints Authority (AFCA) has now been in operation for 12 months and has announced that it has awarded $185 million in compensation to customers in its first year.
The new entity handles complaints that previously would have been handled by the Financial Ombudsman Service (FOS), the Credit and Investments Ombudsman (CIO) and the Superannuation Complaints Tribunal (SCT). It had initially predicted that it expected the number of complaints to exceed 50,000 within the first year.
However, initial figures released by the body show that the dispute resolution scheme for financial services received more than 73,000 complaints from Australians in dispute with their bank, insurance provider, superfund or other financial service providers within its first 12 months.
This reportedly marks a 40 per cent increase in complaints received compared to AFCA’s predecessor schemes, and could be attributed to the fact that AFCA has been actively seeking complaints from members of the public at its "Financial Fairness Roadshow", which promotes the body's services.
The roadshow visited 26 locations across Tasmania, Victoria, the ACT and regional New South Wales - engaging with more than 7,000 people - and will continue across the country next year.
Overview of the findings
According to AFCA, 17 per cent of licensee members had complaints lodged agaist them in the first 12 months of the single dispute resolution body's creation.
Most compliants related to misleading service or production information.
Issues with banks were the primary reason for people calling AFCA (25,826 complaints), followed by problems with general insurers (14,139).
Credit complaints, insurance claims and financial hardship were flagged as the biggest problem areas for consumers.
AFCA has not yet released a breakdown of complaints for the broker market, but it is expected that a tool will be released by the body in due course that will provide further information of the sectors and issues brought to AFCA by consumers.
It has revealed, however, that a total of 50 "systemic issues" were identified and are currently under investigation. Thirty of these "systemic issues" are said to be "potential serious contraventions and other breaches".
Of the 73,272 complaints received as at 31 October 2019, AFCA stated that 56,420 have been resolved, with most being completed in 60 days or less.
Further, 70 per cent of complaints were resolved in favour of the complainant, according to AFCA statistics.
AFCA chief executive officer and chief ombudsman David Locke stated:“Every day, we continue to hear from people who are dissatisfied with the way their financial firm has handled their complaint. These matters have not been resolved internally by financial firms and so the individual then brings their complaint to AFCA,” Mr Locke said.
“We take our commitment to fairness and independence very seriously, and where possible we encourage the financial firm and complainant to resolve the matter among themselves. The statistics show that this happened with 70 per cent of all claims resolved in the past 12 months.
“Still, the increase in complaint numbers we are witnessing at AFCA indicates that there is still work to be done by firms to improve their practices and restore public faith in financial firms. AFCA will continue to focus on member engagement to help firms to enhance their own internal dispute resolution procedures.”
He continued: “Establishing AFCA as a new organisation and handling a 40 per cent increase in complaints was never going to be easy and we are still improving the way we operate.
“I am very proud of the AFCA team and what has been achieved so far. I am fortunate to work with a great team of people who are professional, passionate about fairness and independence, and who care about our customers."
Hannah Dowling is a cadet journalist for The Adviser and Mortgage Business.
Prior to joining Momentum Media, Hannah worked as a content producer for a podcast catering to property investors. She also spent six years working in the real estate sector at a local agency.
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