Annual Review 2023-24
Contents
- About this Annual Review
- Year at a glance
- Board Chair message
- Chief Executive Officer and Chief Ombudsman message
- Organisational overview
- Complaints
- Who complained to AFCA in 2023–24?
- AFCA Engagement with First Nations peoples
- Overview of complaints
- Open cases
- Closed cases
- Banking and finance complaints
- Buy now pay later
- Scam complaints
- Financial difficulty complaints
- Small business complaints
- General insurance complaints
- Significant events
- Life insurance complaints
- Superannuation complaints
- Investments and advice complaints
- Cryptocurrency
- Complaints lodged by consumer advocates and financial counsellors
- Complaints outside AFCA’s Rules
- Systemic issues
- AFCA’s Code compliance and monitoring function
- Engagement, awareness and accessibility
- Corporate information
- AFCA General Purpose Financial Report
- Glossary
Between 1 July 2023 and 30 June 2024
Banking and finance complaints received
Top five banking and finance complaints received by product
|
Product |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Personal transaction accounts |
3,815 |
5,758 |
7,416 |
13,781 |
16,551 |
|
Credit cards |
11,628 |
9,903 |
9,153 |
10,555 |
11,913 |
|
Personal loans |
5,722 |
5,343 |
5,679 |
6,524 |
7,737 |
|
Home loans |
7,608 |
6,400 |
6,439 |
7,096 |
6,963 |
|
Online accounts |
523 |
943 |
1,937 |
1,910 |
2,605 |
Top five banking and finance complaints received by issue
|
Issue |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Unauthorised transactions |
4,915 |
4,878 |
6,174 |
10,614 |
12,505 |
|
Other type of scam¹ |
- |
- |
- |
- |
5,823 |
|
Interpretation of product terms and conditions |
978 |
1,425 |
2,440 |
2,075 |
3,876 |
|
Service quality |
3,193 |
4,373 |
5,677 |
5,222 |
3,469 |
|
Incorrect fees costs |
2,686 |
2,480 |
2,488 |
2,561 |
2,561 |
Banking and finance complaints closed
Average time to close a banking and finance complaint in days²
Stage at which banking and finance complaints closed
|
Stage |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
At registration |
23,439 |
24,388 |
25,293 |
31,751 |
36,057 |
|
At case management |
15,394 |
14,120 |
12,373 |
12,464 |
16,956 |
|
At rules review |
4,787 |
3,707 |
4,146 |
3,521 |
4,811 |
|
Decision |
1,938 |
2,043 |
1,718 |
1,320 |
1,332 |
Time taken to close banking and finance complaints
|
Time |
2019-20 |
2020-21 |
2021-22 |
2022-23 |
2023-24 |
|---|---|---|---|---|---|
|
Closed in 0-30 days |
14,837 |
14,018 |
16,759 |
19,021 |
22,925 |
|
Closed in 31-60 days |
15,347 |
13,678 |
13,398 |
16,192 |
17,047 |
|
Closed in 61-180 days |
12,943 |
12,848 |
10,925 |
11,390 |
14,911 |
|
Closed in 181-365 days |
2,080 |
2,037 |
1,634 |
1,951 |
3,763 |
|
Closed in more than 365 days |
351 |
1,677 |
814 |
502 |
510 |
¹ This is a new complaint category. It includes other financial scams which do not form part of unauthorised transactions figures where many scam cases are seen.
² This excludes complaints that were inactive for an extended period, for example, complaints that were paused because the financial firm was insolvent or due to court proceedings, and complaints that were previously closed and then re-opened.
Key complaint trends
Rising complaint numbers are a growing concern
AFCA saw a significant increase in complaints related to banking and finance (up 12% overall), with notable rises in online accounts (up 36%), personal transaction accounts (up 20%), credit cards (up 13%) and personal loans (up 19%).
Scams and unauthorised transactions are key drivers of complaints
Scams continue to be a major issue in the financial sector, accounting for a significant portion of the complaints.
Unauthorised transactions led the complaints, with 12,505 reported cases, indicating an ongoing challenge for both financial firms and consumers.
Hardship complaints reflect growing financial pressures
AFCA noted an 18% rise in hardship complaints, reflecting economic challenges facing many Australians. Complaints often relate to lenders’ failure to adequately respond to hardship requests, and AFCA is working with the industry to improve processes and reduce the number of avoidable complaints. You can read more about hardship complaints here.
Resolution and timeframes
AFCA managed higher volumes efficiently
Despite a significant increase in complaints, AFCA closed 21% more banking and finance complaints (59,156) compared to last year.
Complaint closure timeframes remain steady
The time taken to resolve complaints remained stable, with a 21% increase in cases closed within 0-30 days (39% of total closures) and a significant 93% increase in cases closed within 181-365 days.
Early resolution rates remain strong
61% of banking and finance complaints were resolved at the registration and referral stage, indicating a continued commitment from financial firms to resolve issues early.
Industry trends and challenges
Scams
Scams remain a major issue for consumers and financial firms. Many firms, in partnership with the government, have strengthened detection and prevention measures, resulting in a reported decrease in scams. However more needs to be done to prevent scams from happening in the first instance, including the responsiveness of the industry to implement new protections and technology early before further harm is done.
More to be done in early complaint resolution
While financial firms are making progress in resolving complaints early, more work is needed to prevent disputes from escalating to external resolution. Addressing the root causes of complaints is crucial for long-term improvement.
Terms and conditions
There has been a significant rise in problems related to product terms and conditions. Many consumers report confusion and frustration due to unclear or overly complex language, leading to misunderstandings about what their policies or financial products actually cover.
Increase in systemic issues related to hardship requests
There has been an increase in the number of systemic issues being referred in the banking and finance space. Issues include failing to identify and respond to hardship notices, not considering the individual’s circumstances or vulnerability, taking debt collection action despite a complaint being lodged with AFCA and generally making the process too hard to complete. AFCA is working with the industry to address this and reduce avoidable complaints. You can read more about our systemic issues work here.
Responsible lending
We are encouraged by the slight reduction in responsible lending complaints following the introduction of AFCA’s Responsible Lending Approach in December 2023. We appreciate the active participation of industry and consumer advocates in AFCA’s training sessions.
Recognising the significance of responsible lending obligations, AFCA has made a concerted effort to engage directly with industry to address any identified issues, helping improve practices and foster broader industry learnings. AFCA remains dedicated to sharing our expertise and collaborating constructively on these important matters.
Case study
Background
A mother, 56, on a disability pension for over a decade, and her 21-year-old daughter, employed part-time, secured an investment loan from a bank. The loan was backed by the investment property and a mortgage on the mother’s home. They faced financial hardship soon after obtaining the loan and eventually sold the property at a significant loss of $140,000. This left them with an outstanding debt they could not manage and put the mother’s home at risk.
Complaint
The mother and daughter argued that the bank should not have approved the loan. They claimed the bank encouraged them to apply for an investment loan, even though the bank knew they intended to live in the property. They contended that the bank should have recognised the loan as unaffordable and unsuitable for their needs.
Outcome
The Ombudsman found that the bank breached its obligations in several ways. Firstly, the bank did not make reasonable inquiries or take necessary verification steps when assessing the joint loan, even though it was classified as an investment loan. If proper inquiries had been made, the bank would have determined the loan to be unaffordable. Secondly, the loan failed to meet the objectives and requirements of both complainants, particularly as the bank did not ensure that the mother understood the implications and risks associated with the joint loan. Additionally, despite the complainants indicating that the loan was for investment purposes, the bank either knew or should have known that the property was not being purchased for this reason.
As a result, the Ombudsman determined that the bank should compensate both financial and non-financial losses, including the capital loss from the property sale. This case highlights the importance for banks to strictly adhere to responsible lending laws, thoroughly assess the risks and benefits, and carefully consider the individual circumstances of all parties involved.
Case study – Ensuring fairness and compassion in hardship assistance
Background
The complainant, a survivor of family violence with significant mental health challenges, held a home loan secured by a mortgage on her home. For over a decade, she endured difficult family circumstances due to her abusive ex-partner, which impacted her and her children’s well-being. Facing long-term financial hardship and needing time to sell her home, she requested the bank’s assistance. Specifically, the time to sell the property.
Complaint
Despite the bank’s knowledge of her situation and its commitment to the Banking Code of Practice, the complainant experienced inadequate support. The bank’s ‘special assistance’ team provided superficial help and failed to genuinely address her needs. During this period, the bank issued default and legal notices, exacerbating her stress.
Outcome
After considering the separate claims within the complaint and finding the financial firm had breached its hardship obligations, did not meet expectations in relation to considering vulnerability and breached notice requirements, AFCA awarded an accumulated total of $11,900 in compensation. This amount compensated the complainant’s non-financial loss due to the extreme stress and inconvenience caused by the financial firm’s various breaches and conduct.
This case underscored the importance of rigorous compliance with responsible lending laws and the need for compassionate, tailored support for vulnerable customers.
