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‘Responsible lending’ issues among top consumer complaints

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Annie Kane 6 minute read

Credit cards and home loan issues were the most complained-about products in financial year 2021, with responsible lending issues frequently cited, according to AFCA.

The Australian Financial Complaints Authority (AFCA) has released a preliminary data “snapshot” of complaints made by individual consumers and small businesses to the body in the last financial year.

According to the external dispute resolution scheme, there were 70,510 complaints made in FY21 (ended 30 June 2021), with two-fifths (40 per cent) of these made about credit products.

The most complained about product in 2020-21 was credit cards (14 per cent), with consumers particularly highlighting issues with default listings (the most common issue relating to all credit products) and unauthorised transactions – the latter accounting for 11 per cent of card complaints.

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Issues with mortgages were also high up on the complaint list, comprising 9 per cent of all credit product complaints, making them the second-most commonly complained about credit product.

According to AFCA, after default listing issues, the four most commonly received credit complaints related to:

  • Financial firms failing to respond to requests for assistance (2,678 complaints)
  • Service quality (2,554 complaints)
  • Incorrect fees/costs being charged (1,894 complaints)
  • Responsible lending (1,698 complaints)

Complaints involving financial difficulty were down nearly 40 per cent on last year, but those relating to personal transaction accounts rose 48 per cent, with unauthorised transactions accounting for 29 per cent of those complaints. 

Similarly, complaints about electronic banking increased 76 per cent, with unauthorised transactions accounting for 28 per cent of those complaints and mistaken internet payments accounting for a further 19 per cent. 

This may be accounted for by an increase in online scams.

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Notably, AFCA said it found “a range of systemic issues” in FY21, which resulted in remediation payments to consumers totalling nearly $32 million in the past financial year. 

Banks continue to be most complained about

The data snapshot also revealed that more than a third of all complaints were lodged against banks, totalling 26,281 complaints.

Other credit providers were the subject of 8,216 complaints (or 11 per cent).

The preliminary figures do not show how many complaints were made against mortgage or finance brokers over the full financial year, however this information is expected to be made available later this year. In the first six months of the financial year, AFCA data showed that less than 1 per cent of complaints were lodged against mortgage brokers.

AFCA noted that 1,706 of its 35,000 members (around 4 per cent) had a complaint lodged against them this period.

It added that around 70 per cent of cases brought were resolved by agreement, and that nearly 60 per cent of cases were resolved within 60 days.  

More than $240 million in compensation and refunds were issued in FY21, alongside fee waivers, debt forgiveness and apologies. 

Overall, complaints were down 12 per cent on 2019-20, when the initial COVID-19 pandemic period caused a spike in complaints in areas such as travel insurance. 

AFCA’s chief ombudsman, David Locke, commented: “Significantly, complaints involving financial difficulty were down nearly 40 per cent from the numbers we saw the previous year. That’s a great outcome and reflects the positive response from government and industry to the impact of COVID. 

“However, it’s too early to say we’re out of the woods yet. It may be some months before we know the full impact of the end of government emergency support and assistance from financial firms such as deferred loan repayments. And, of course, we are still living with COVID-19,” he said. 

“It’s important that consumers and financial service providers continue to work together to resolve issues quickly as they emerge.

“The past 12 months show what’s possible when that happens.”

[Related: Mortgage broker complaints remain below 1%]

‘Responsible lending’ issues among top consumer complaints
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

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