The corporate regulator is ramping up efforts to curb misconduct in the financial services sector amid a rise in complaints from consumers since the onset of the COVID-19 crisis.
Appearing before the Senate parliamentary joint committee, corporations and financial services on Wednesday (15 July), ASIC chair James Shipton outlined the regulator’s main priorities amid the COVID-19 crisis.
According to Mr Shipton, ASIC has been “acting swiftly” to “protect consumers from harm during this time of heightened vulnerability”.
“Even when things are going well, many people find dealing with money and finances to be a stressful experience,” he said.
“We acknowledge these challenges and the hardships that individuals and businesses are facing during prolonged periods of shutdown.”
Mr Shipton said ASIC has ramped up efforts to bolster financial literacy in the community in a bid to ensure consumers “make well-informed decisions”.
However, the ASIC chair revealed that despite the regulator’s efforts, misconduct claims in the financial services sector have spiked since the onset of COVID-19.
“Difficult times, such as now, bring out the best in Australians. Unfortunately, they can also bring out the worst in a small number of people,” he said.
“This is evident from the 20 per cent year-on-year increase in reports of misconduct received by ASIC since April.
“We have also seen a rise in the number of scam reports from Australian consumers.”
This comes just weeks after the Australian Financial Complaints Authority (AFCA) revealed that it has received 4,773 complaints relating to COVID-19.
AFCA chief ombudsman and CEO David Locke said he expects to see more COVID-related complains in the coming months.
“We anticipate seeing more financial difficulty-related COVID-19 complaints over the next six months as government support, such as JobKeeper payments, are wound back, along with the end of financial firm initiatives such as a ban on rental evictions and mortgage pausing,” Mr Locke said.
Research from MyState Bank recently revealed that brokers have played a key role in providing support to distressed financial services customers.
Two-thirds of mortgage brokers surveyed by MyState reported an increase in engagement with their customers since the onset of the crisis.
Reflecting on the findings, MyState Bank general manager, banking, Tony MacRae said the results suggest customers are increasingly depending on brokers for support that extends beyond the traditional broker proposition.
“The coronavirus pandemic is causing Australians, especially those with mortgages, to feel anxious about their financial situation,” he said.
“The effects of the pandemic have been far-reaching, not just impacting people’s finances but their emotional state as well.
“During this period, we are seeing the role of mortgage brokers evolve to not only helping customers navigate through this period financially but providing emotional support too.”
[Related: AFCA broker complaints drop in the ocean]
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Charbel Kadib is the news editor on The Adviser and Mortgage Business.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.
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