AFCA has revealed that mounting financial pressures and shortcomings in customer support are fuelling a surge in disputes in the banking and finance sector.
The Australian Financial Complaints Authority (AFCA), Australia’s financial dispute resolution body, has linked rising banking and finance complaints to mounting financial stress, persistent scams, and shortcomings in firms’ responses to customers seeking hardship assistance.
Its 2025–26 annual review recorded 66,971 banking and finance complaints, up 23 per cent from 54,581 a year earlier, with the sector accounting for more than half of the record 119,949 complaints lodged across AFCA.
AFCA identified economic pressures, credit reporting disputes and firms’ responsiveness to struggling customers as key features of the increase.
“The increase came amid continuing cost-of-living pressures and enduring higher interest rates, with some complaint growth areas suggestive of growing financial stress in the community,” it said.
“Scams, unauthorised transactions and service issues remained among the most common issues raised with AFCA. There was a sharp increase in credit reporting complaints as well as complaints about financial firm responsiveness to customer needs during periods of financial hardship.”
When process becomes the problem
AFCA said complaints frequently concerned customers’ interactions with firms and their understanding of procedures, rather than simply whether assistance was approved.
“In many cases, the complaints related to how consumers were engaged with by the financial firm, or to their understanding of the process, rather than the outcome, such as whether hardship relief was granted,” it said.
The authority added that the findings underscored the need for businesses to respond to customers’ circumstances as economic pressures intensify.
“These trends highlight the importance of financial firms being prepared to meet their customer needs in challenging economic conditions. In some cases, this will require hardship or other support,” AFCA said.
AFCA chief ombudsman and chief executive David Locke said the complaint volumes demonstrated the importance of addressing problems before they escalated.
“Nobody wants to see this number of complaints. The data reinforces the need for firms to resolve issues early where they can,” Locke said.
“People tend to contact financial firms for hardship assistance when they’re already under pressure. Firms need to do more to identify hardship early and provide meaningful support for these customers.”
Scams led banking and finance issues with 6,580 complaints, followed by unauthorised transactions (6,038), service issues (4,315), failure to follow instructions or agreements (3,825), and fees or charges (3,676).
AFCA said the figures highlighted both the harm caused by fraud and the importance of businesses handling of the aftermath.
“These figures reflect the continuing impact of scams and fraud on consumers and the importance of effective responses when things go wrong,” it said.
By product, personal transaction accounts attracted 17,011 complaints, ahead of credit cards (12,066), personal loans (7,200), home loans (7,014) and online accounts (3,334).
Business label fails scrutiny
A case study detailed how a borrower seeking help with home loan arrears ended up with a business loan that AFCA found should have been regulated as consumer credit.
After another lender declined her application, her mortgage broker suggested using her ABN to secure a six-month business loan to clear the arrears.
She then signed a business purpose declaration, and the broker arranged funding through a related-party lender, with the proceeds paying her home loan arrears.
When the term expired, she needed to refinance, incurred significant additional fees and was told she would have to establish a new company to refinance with the same lender.
She complained against the broker, and AFCA then examined whether the declaration was effective when both the broker and lender knew the funds would repay home loan arrears.
It found the declaration ineffective because the broker knew the borrowing was substantively personal and that, despite its business structure, the loan was regulated by consumer credit legislation and should not have been provided as business-purpose finance.
AFCA also assessed the broker, an industry association member, against the relevant industry code.
Among complaints lodged by consumer advocates, personal loans accounted for 247, home loans 138 and credit cards 64.
Leading issues also included responsible lending (172), failure to respond to financial difficulty requests (147) and service issues (40).
Meanwhile, AFCA closed 64,130 banking and finance complaints, with 64 per cent closed at referral, and the body improved average closure time to 53 days from 62.
Rules review accounted for 4,266 closures and decisions for 1,876, while 1,098 complaints took more than 365 days to close.
At 30 June 2026, AFCA had 32,087 open complaints, compared with 29,117 a year earlier, with banking and finance representing 12,685, or 40 per cent, of that outstanding workload.
[Related: Complaints hit record highs as banking dominates case load]
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