The financial services industry ombudsman has received over 450 complaints so far relating to consumer treatment by banks, super funds and life insurers in the COVID-19 pandemic, as financial firms struggle to deal with soaring levels of hardship requests.
Appearing at the House of Representatives standing committee on economics’ hearing into the insurance industry, AFCA chief executive David Locke said the authority had received 473 complaints relating to the coronavirus crisis across the super, banking and life insurance sectors.
“A lot of the banking matters relate to financial difficulty, although we are conscious of the big efforts some of the large banks have made to defer payments,” Mr Locke said.
Facing questioning around why the authority had chosen to extend the usual response times for financial firms during the crisis, Mr Locke said the inability of many firms to get call centre staff in particular to work had meant that it was “not realistic” for consumers to expect a response to their complaint in the usual time frame.
“We have to recognise that the banks have had over 500,000 requests for financial hardship in a very short period of time,” he said.
“Some insurers have been hit with the closure of offshore contact centres and high volumes of matters coming through. It serves nobody’s purpose if we are maintaining deadlines that are consistently unachievable, because from a consumer perspective it’s not going to come through realistically in the expected period of time.”
Mr Locke said AFCA welcomed the letters sent by ASIC to life insurers on Monday, urging them to proactively offer consumers alternatives if they were unable to pay premiums due to financial hardship.
“We talk to ASIC on a daily basis and with APRA regularly as well, and we know it’s really important for the industry and consumers to have consistency of practice,” he said.
Appearing later in the day, Clearview managing director Simon Swanson said the insurer had received over 300 requests for either temporary premium waivers or suspension of cover due to financial hardship.
“We’ve had one customer who died [as a result of COVID-19] in our super fund and their beneficiaries will be paid out, and we’ve also had about 250 people require premium waivers,” Mr Swanson said.
“I should also say we have an offer where we can suspend cover for 12 months that doesn’t provide cover during that period, but it means you can come back on cover after 12 months and not go through underwriting, and we’ve had 74 people ask for that.”
Mr Swanson added that the group’s super fund had seen over 150 withdrawals through the government’s early access scheme, totalling around $1.5 million.
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