Your InFinance Publication

FINSIA’s InFinance keeps you up-to-date and in-the-know. 

AFCA: “we’re flooded with work.”

by Alexandra Cain | 16 Apr 2019
The new Australian Financial Complaints Authority (AFCA) has identified 81 systemic issues in the Australian financial services sector since November, with misleading and deceptive conduct one of the most serious issues it has uncovered.

This was one of the fascinating insights AFCA CEO David Locke shared during a recent roadshow held in conjunction with FINSIA.

Locke revealed a host of concerning statistics during the event. In addition to the systemic issues it has uncovered, AFCA has also found 13 serious contraventions of the law, which it has reported to the appropriate authorities. 

Since AFCA opened its doors in November last year it has received 23,000 complaints. Of these, 55 per cent have been resolved, which has resulted in at least $67 million being paid out so far.

Complaints relate to 11.1 per cent of AFCA’s 37,000 members, which are financial services sector organisations. A total of 10,000 disputes relate to banks and of these, 67 per cent relate to the big four banks. It receives 3,000 calls to the helpline a week and it expects to receive 70,000 complaints in its first year. There has been a doubling of complaints regarding superannuation since AFCA started. 

“We think this is because since the royal commission, people have been looking at their super for the first time in a while – or ever,” said Locke said, adding AFCA has been, “flooded with work.”

Nevertheless, he says many financial services firms will not have had complaints, especially small practices. “You would expect a number of complaints against the bigger players, but there are some outliers as well.”

An independent not-for-profit organisation, AFCA incorporates the former Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal, which is still operating until it completes existing matters. AFCA considers complaints about financial advice, deposit taking, insurance and superannuation, among other things.

AFCA is funded by membership fees, levies and certain fees-for-service. Its board comprises 50 per cent industry representatives and 50 per cent consumer representatives with an independent chair in Helen Coonan. While it’s not a government agency, it is an important part of the regulatory framework.

“Fairness must underpin everything we do,” said Locke, adding, “our role is not just about resolving complaints, it’s also about enhancing standards across the industry.”  

Although the Financial Services Royal Commission may be over, there are still many consumers with legitimate complaints against banks. “Most of the people contacting us are white-hot angry and many of their issues have not been looked at and we are seeing serious misconduct,” he stressed.

From the consumer perspective, Locke says many people have not yet heard about AFCA. He wants to ensure they have the opportunity to avail themselves of its services should they wish to make a complaint about the entities which are its members. 

Locke is also calling out financial services businesses that are not appropriately responding to complaints. “Firms need to be properly resourcing their teams and approach AFCA in the right way; there’s a legal requirement to co-operate with us.”

Fiona Guthrie, chief executive of Financial Counselling Australia, also addressed the event. She stressed how important empathy is when consumers are making a complaint or experiencing hardship. 

“We need to start building empathy and kindness into our work because we’ve forgotten how to treat people with respect. We’ve become remote from what’s happening with people,” she says, adding that this is,” a reason why we saw the disturbing situations played out in the royal commission.”

Guthrie acknowledged talking about money in our society can be difficult and highly personal. “That’s why we put off talking to banks and others when we’re in hardship. If we bring more empathy into our work it will have much more impact.”

To find out more about AFCA click here.

To find out more about Financial Counselling Australia click here.

Comments

Share this