Login
iscover
Data shows complaints related to financial hardship and insurance handling dominated AFCA's reporting period.
Newsletter
AFCA chief blasts financial firms as complaints hit record high
28 July 2023
•
12 minute read
You’re out of free articles for this month
To continue reading the rest of this article, please log in.
Create free account to get unlimited news articles and more!
The head of the Australian Financial Complaints Authority has blasted the industry as unfair and says it needs to lift its game after consumers lodged a record 97,000 complaints during 2022-23, up by more than a third on the previous year.
Banking and finance proved to be the most problematic sector with a 27 per cent increase in complaints, while insurance claim handling was AFCA’s “top issue”, up 76 per cent.
Chief executive officer David Locke said he was “deeply concerned” and singled out general insurers as needing to do more to bring delays down.
“We need to see a significant improvement from firms,” he stressed, “It’s not fair on consumers and not good for business,” Mr Locke said.
“We have been raising our concerns about claim delays with insurers for over 12 months now.”
In a statement to Accountants Daily, the Insurance Council of Australia said that it was "Aware of some delays in claims processing both from catastrophes and general insurance claims" but blamed “significant pressure” on insurers’ systems caused by flooding and a shortage of experts in assessing claims.
==
==
The Insurance Council of Australia added that, "in April this year the Insurance Council announced it would undertake a review of insurers’ response to the 2022 floods.”
"Timeframes, resources deployed, claims handling, complaints handling, communication with policyholders, and engagement with stakeholders will all be examined as part of the review, which is expected to be completed in October."
General insurance complaints rose by 50 per cent from 2021-22, with 7,953 delay-related complaints (up 66 per cent).
Mr Locke said “While we acknowledge the challenges insurers have faced, the bulk of complaints in the past year were not about natural disasters but about regular claims. We would like to see insurers take the necessary steps to ensure fewer policyholders have to take a complaint to AFCA.”
Claim delays also plagued superannuation, with AFCA recording a 136 per cent rise in complaints.
Mr Locke said protracted claims related to death benefits were “distressing” to consumers, adding that access to benefits is “vital for people who have lost a loved one or are unable to work.”
There were 53,638 complaints about banking and finance providers, and consumers took the greatest issue with personal transaction accounts, making 13,781 complaints.
This 86 per cent increase from the previous reporting period saw personal transaction accounts overtake credit cards as the financial product consumers complained about the most.
The collapse of wealth manager Dixon Advisory also inflated complaints about investments and advice, accounting for 36 per cent of a total 4,840 complaints.
Other figures painted a picture of the hardship experienced by consumers impacted by consecutive rate hikes in the past year.
AFCA observed a 31 per cent rise in complaints involving financial difficulty during the June quarter when compared to the same period in 2022-23.
Consumers that resorted to buy now, pay later services to manage tighter budgets complained 57 per cent more to AFCA.
“This underlines the importance of the federal government’s plan to regulate BNPL under the National Consumer Credit Act, and recent reforms addressing what’s known as ‘payday’ lending,” Mr Locke said.
The data also suggested that consumers were experiencing more scams than before, with scam-related complaints rising by 46 per cent compared to the previous year.
However, the government’s proposal for codes of practice to address scams could help “lift the bar on scam prevention and remediation,” according to Mr Locke.
“A more consistent approach across the sector…will also aid the work we do as an ombudsman service,” he said.
You are not authorised to post comments.
Comments will undergo moderation before they get published.