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AFCA sees complaints soar after Royal Commission

by Lewis Panther SA FIN | 18 Feb 2019
Complaints to Australia’s new one-stop financial services ombudsman are being lodged at a rate of 200 a day. 500 AFCA sees complaints soar after Royal Commission

The Australian Financial Complaints Authority has received more than 20,000 since it began operating last November.

AFCA had predicted an increase in the number of complaints it dealt with since taking over from its predecessor to rise by more than a quarter.

But it has already had to revise its estimates up another 20 per cent after three months of business. 

The fallout from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry is one of the main reasons for this, according to AFCA’s David Locke.

The Chief Ombudsman and CEO - who will be holding a series of workshops with FINSIA in April - revealed how busy the new body set up after the 2016 Ramsay Review had become. 

He said: “Since 1 November 2018 to date, we have received over 20,000 complaints. 

“Most of the complaints AFCA has received have been about credit, followed by general insurance and deposit taking.”

Between November and the end of January, AFCA received 17,576 complaints from consumers and small businesses. 

Complaints about credit stood at 44% of the total, followed by general insurance, which amounted to 22%. Nine per cent of complaints received were about superannuation. 

Locke added: “While most complaints were lodged by individual consumers, 1,273 complaints were lodged by small businesses, an area where we have expanded jurisdiction.

“The most complaint provider type were banks with 6,113 complaints, followed by general insurers (3,239 complaints) and credit providers (2,903 complaints). The trends we are seeing remain fairly consistent.

“Based on our predecessor schemes’ complaint volumes, we projected receiving 55,000 complaints in our first year, a 27% increase. 

“However, the current volume of complaints we have been receiving suggest that we might instead receive around 69,000 complaints in our first year – a 20% increase on our forecast, and significantly beyond the expected initial increase. 

“This increase means that more and more Australians know about AFCA, and are aware that they can approach us when they are experiencing financial firms.

“There are a few reasons for the increase. The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry brought issues with the financial services industry to the forefront. 

“This has made the Australian public more aware of when things weren’t right with their financial firm, and learning that they could approach AFCA for free.

“Since and in the lead up to our launch, AFCA has been committed to increasing awareness about our service, and ensuring that Australian consumers and small businesses know they can approach us for redress with financial issues.

“Given this increase in the volume of complaints we have been receiving, we are reviewing our complaint projections. Considering how we might managed increased demands on our service, while achieving our purpose, vision and goals successfully, is an ongoing process. 

“We have several initiatives to deal with the increased volume of complaints in place already and are piloting new initiatives. Our purpose is to provide fair, independent and effective solutions for financial disputes, this is the crux of our work.”

But it’s not just the number of complaints that has increased, Locke revealed.

Almost half have been resolved.

And AFCA is holding a series of forums, including those with FINSIA, to improve consumer awareness.

He said: “A very important issue we will be focusing on enhancing firms’ internal dispute resolution functions and frameworks. 

“We want financial firms to ensure that they are improving how they are resolving issues and problems raised by consumers through their internal dispute resolution areas, and that they are properly notifying consumers about their right to come to AFCA.

“In the future, we hope that an external dispute resolution scheme such as AFCA will not be necessary to resolve financial complaints. Instead, financial firms should make sure that they are constantly working to enhance their internal dispute resolution processes and dealing with complaints as they arise.”

Read the full interview in The Standard here.

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