AFCA broker complaints drop in the ocean

by Malavika Santhebennur•06:35 AM, 8 Jul 2020•11 minute read

The number of complaints made to AFCA against all brokers have remained insignificant, despite AFCA receiving complaints about credit and loan repayment issues.

The Australian Financial Complaints Authority (AFCA) has reported that complaints against brokers comprised less than 2 per cent of all complaints in the 2019-20 financial year.

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Figures provided to The Adviser have revealed that the complaints authority received 1,540 complaints against brokers in the period between 1 July 2019 and 30 June 2020.

However, this included complaints against general insurance brokers, life insurance brokers and stockbrokers, as well as mortgage brokers and finance brokers.

Speaking to The Adviser, AFCA CEO and chief ombudsman David Locke said: “We receive very few complaints about brokers.

“In fact, most members do not see any complaints lodged against them.”

AFCA recently released data in which it said the coronavirus pandemic has had a significant impact on Australian households. The data showed that 20 per cent of all COVID-19-related complaints related to financial hardship.

Mr Locke said AFCA saw fewer complaints relating to COVID-19 than anticipated, which he attributed to the “proactive response taken by financial firms”.

“We commend financial institutions for their quick response to the pandemic,” Mr Locke said.

“As always, we encourage banks and insurers to maintain open and transparent communication with their customers about the support available to them if they’re experiencing financial difficulty.”

Since the virus was declared a pandemic in March, AFCA has received 4,773 complaints relating to COVID-19.

Credit was the second most problematic issue for consumers, with AFCA receiving 1,711 credit-related complaints. Almost a quarter of these were about a failure to respond to requests for assistance.

Mr Locke warned that AFCA expects to see more financial-difficulty-related COVID-19 complaints over the next six months as government support such as JobKeeper payments are wound back, as are initiatives by banks and financial firms such as mortgage repayment relief.

AFCA received a total of 80,546 complaints between 1 July 2019 and 30 June 2020, which is a 13.7 per cent increase in monthly complaints compared with the previous financial year. Banks were the most complained about financial institution.

In March this year, complaints data released by AFCA’s Datacube revealed that between July and December 2019, AFCA received a total of 3,649 complaints 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 0.78 per cent in the eight months between November 2018 and June 2019.

AFCA has said it will release more information about complaints against mortgage brokers in its annual review and via Datacube later this year.

AFCA has received 127,694 complaints since commencing operations on 1 November 2018, and has secured $371.1 million in compensation and refunds to consumers.

Credit has been the most complained about issue by consumers, making up 43 per cent of all complaints, while the majority of all complaints have been about banks, comprising 35 per cent of all complaints.