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AFCA claims against banks continue to rise

by Alexandra Cain | 01 Apr 2019
Complaints to the new, independent Australian Financial Complaints Authority (AFCA) continue to rise in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. AFCA is an ombudsman set up to address complaints about financial services businesses.

There have been 23,000 complaints in only four months or 5,900 complaints a month, a figure that is 42 per cent higher than the proportion of complaints dealt with by predecessor bodies such as the Financial Ombudsman Service (FOS). 

AFCA is now expecting 69,000 complaints to be made in its first year – it previously expected 55,000 complaints in year one. These figures don’t include legacy complaints, which the body is also tasked to handle. So far, it has resolved 20,000 disputes, including legacy FOS claims. 

AFCA’s chair, Helen Coonan, told a recent banking and financial services conference these figures, “provide ample evidence to drive much needed cultural change in our banking sector – change for which the community is crying out. This shows just how far the sector has to go to reduce and resolve disputes with their own customers.” 

However, the fallout from the royal commission is viewed, said Coonan, “poor culture in financial institutions has been fingered as the main culprit that permitted a slew of bad practices, appalling treatment of consumers and small businesses, and in many cases arrogant indifference to regulatory and compliance risk. 

“The task ahead of banks to address the poor culture deeply embedded throughout their organisations is, no doubt, a monumental one. A good place to begin this cultural revolution is for banks to start treating their customers fairly, to improve internal complaint handling and to stop problems occurring in the first place.” 

In total, AFCA has awarded $54.3 million in compensation and made 39 investigations into potential problems in the financial services system since it was formed in November last year. Additionally, eight investigations are taking place at the moment into serious contraventions, with misleading conduct the most common problem among financial firms.

Dissecting the data, 9,833 complaints have been made so far to AFCA against banks specifically, almost 35 per cent of the 28,251 complaints made. Of these, 6,576 or 67 per cent are about the big four banks, ANZ, CBA, NAB and Westpac.

The highest number of complaints has been about credit cards, which make up 31 per cent of all the reported issues. This is followed by home loans (23 per cent), savings accounts (12 per cent), personal loans (eight per cent) and investment property loans (four per cent).

Looking at the substance of the claims, unauthorised transactions was the top issue raised, making up 16 per cent of all complaints. Credit reporting and responsible lending respectively made up eight per cent of complaints and service quality and incorrect fees and costs each made up seven per cent of complaints. 
FINSIA is hosting a roadshow in conjunction with AFCA this week that will explore consumer complaint trends and opportunities to improve outcomes for customers and enhance industry practices and processes.

Commenting on the events, AFCA CEO David Locke said, “I am proud to be speaking at the FINSIA roadshows about the work AFCA is doing to improve fairness and customer outcomes in a post banking royal commission world.” 

“During the session I will be covering the types of complaints AFCA receives and opportunities for financial practitioners to improve industry practices and processes,” says Lock. 

“Part of AFCA’s role is to raise industry standards and embed a new customer-focused culture to stop problems occurring in the first place. We are actively working with financial firms to minimise disputes. The FINSIA roadshows are part of our commitment to get out there and talk to people across the country, to share our insights and give practical tips on how to manage disputes," he added.

Book your ticket for the event near you.

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