Financial complaints hit record high

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The Australian Financial Complaints Authority (AFCA) received a record number of complaints in the 2024 financial year, jumping 9% to more than 105,000.

Preliminary numbers show scam-related complaints drove the surge, together with motor vehicle insurance, banking, finance, and general insurance sector-related issues.

AFCA has not yet provided a breakdown of the complaints related to financial advice, super, and life insurance, only flagging that banking and finance complaints rose 11% to 59,636.

afca financial complaints hit record new high

Scam-related complaints rose 81% to 10,951 in FY24, averaging 913 a month compared with 504 year on year.

Scams in the super sector were particularly worrying due to their sophistication.

"We urge super fund trustees to review the steps they have in place to protect members from fraud. The fact that scam and unauthorised transaction complaints in super are still low means there's a window of opportunity for trustees to act so we don't experience the sorts of issues seen elsewhere," says AFCA chief ombudsman David Locke.

Personal transaction accounts were the most complained about products at 16,365, up 19% year on year.

Credit cards registered 11,841 complaints, while personal loans and home loans drew in 7660 and 6913 complaints respectively.

"We are disappointed we haven't seen a reduction [in complaints]. Our view is that firms could be resolving more complaints themselves, or preventing them in the first place," Locke says.

"We continue to take steps to be able to keep up with the increasing demand for our service, but it's in everyone's interests that rising complaints are tackled at the source."

Amid higher interest rates and increased costs of living, complaints involving financial difficulty rose 14% to 5525. home loan complaints accounted for nearly one third of these.

The fact this number was not even higher could be seen as testament to the impact of laws requiring responsible lending, Locke says.

"AFCA would continue to closely monitor financial difficulty complaints in 2024-25, after raising concerns earlier this year about lenders' handling of applications for hardship assistance," he says.

"Lenders should respond quickly when people start to experience financial difficulty, providing appropriate support that's tailored to the individual. We don't want to see complaints where a once salvageable situation has become dire."

AFCA will release the final numbers in line with its annual review later this year.

This article first appeared on Financial Standard

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Karren Vergara is a financial journalist with Financial Standard, covering wealth management, including superannuation, banking and financial planning. She is one of the hosts of the Financial Standard Podcast. Prior to becoming a journalist, she was an accountant for more 10 years. She has a diploma in journalism and Bachelor's degree in business, both from UTS.