The number of complaints made to AFCA against mortgage brokers has remained insignificant, despite a reported rise in the number of mortgage-related complaints.
Data released by the Australian Financial Complaints Authority (AFCA) has shown that the average number of complaints per month relating specifically to home loan services has increased recently.
According to the data, the number of mortgage-related complaints rose by 20 per cent in the last six months of 2019, when compared to the average monthly figure in the previous reporting period.
Despite this increase, the number of complaints brought against individual mortgage brokers has hardly shifted.
According to complaints data released on AFCA’s Datacube, between July and December 2019, the financial services ombudsman received a total of 3,649 complains about home loan services, with 2,201 of these being progressed and pursued by AFCA.
Of the 2,201 upheld complaints specifically about home loans, just 15 of these complaints were made (and progressed) in relation to dealings with a mortgage broker.
This means that brokers made up just 0.68 per cent of all complaints made in relation to home loans in the six months to December 2019, down from a 0.74 per cent share of home loan-related complaints in the eight months between November 2018 and June 2019.
In contrast, mortgage lenders (including banks, building societies, and non-bank credit providers) accounted for 93.5 per cent of all complaints made in relation to home loans.
Over the six months to December 2019, AFCA received 36,562 complaints from customers, across all areas of financial services, superannuation, and insurance, and acted upon a total of 19,696 of these.
Out of all 19,696 complaints made and progressed by AFCA throughout the six-month period, only 45 of these were targeted towards mortgage brokers (or 0.23 per cent of all complaints).
This number is slightly higher than the figure reported for the eight months ending June 2019, in which brokers made up just 0.1 per cent of all complaints to AFCA.
Of the complaints made against mortgage brokers during the six months to December 2019, 59.1 per cent related to issues surrounding housing finance, 29.5 per cent about consumer loans, and 11.4 per cent about business finance.
Notably, of the 45 complaints made to AFCA, 18 were considered by AFCA to sit “outside AFCA rules”, meaning the complaint could not be pursued by AFCA and was dropped.
Additionally, a further four complaints were “discontinued” at this stage.
According to Datacube, a total of 24 complaints were made directly against mortgage aggregators, with eight of these, again, falling outside of AFCA’s rules, and therefore not pursued by the complaints body.
The results suggest that while customers had increasing grievances in relation to their home loans, only a small amount of these were attributed to the third-party channel, which facilitates almost 60 per cent of all home loans.
Further, in relation to personal loans and business loans, mortgage brokers accounted for 0.75 per cent and 0.78 per cent respectively of all complaints progressed by AFCA.
AFCA notes home loan grievances
AFCA chief operating officer Justin Untersteiner stated that the “dramatic” increase in average monthly complaints relating to home loans was “disappointing”, however noted that macro-economic factors, including interest rate changes and loan conversions, likely contributed to the results.
“This increase has been driven by financial firms failing to respond to requests for assistance, the conversion of loans from interest only to principal and interest and issues with responsible lending,” he said.
Mr Untersteiner stated that “transparency is key” in changing customer outcomes in the financial services industry following on from the royal commission, which is why the complaints body will be updating and releasing financial complaints information every six months.
“Our hope by releasing this data is that we see improvements and the industry takes action to reduce the number of complaints that end up at AFCA,” he concluded.
Hannah Dowling is a 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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