Banking and finance complaints

Between 1 July 2021 and 30 June 2022

Banking and finance complaint data includes financial difficulty complaints. For specific information on financial difficulty complaints, please click here.

42,392 complaints received

58% resolved at Registration and Referral stage

Banking and finance complaints received

Percentage of banking and finance complaints resolved at Registration and Referral stage

Top five banking and finance complaints received by product

Product	2018–19 ¹	2019–20	2020–21	2021–22
Credit cards	7,112	11,628	9,903	9,153
Personal transaction accounts	1,819	3,815	5,758	7,416
Home loans	4,085	7,608	6,400	6,439
Personal loans	3,724	5,722	5,343	5,679
Electronic banking	520	932	1,668	2,233

Top five banking and finance complaints received by issue

Issue	2018–19 ¹	2019–20	2020–21	2021–22
Unauthorised transactions	2,839	4,915	4,878	6,174
Service quality	1,369	3,193	4,373	5,677
Default listing	N/A ²	N/A ²	3,750	3,410
Financial firms' failure to respond to request for assistance	1,740	3,123	2,735	2,753
Incorrect fees costs	1,521	2,686	2,480	2,488

¹AFCA commenced on 1 November 2018. The 2018–19 financial year covers an 8-month period (from 1 Nov 2018 to 30 Jun 2019). Year-on-year changes between 18–19 and 19–20 have been calculated pro rata using monthly averages.

²A distinct issue category for default listing didn’t exist before 2020-21.

43,530 complaints closed

Average time to close a complaint 60 days

Banking and finance complaints closed

Average time to close a banking and finance complaint in days

Stage at which banking and finance complaints closed

Stage	2018–19 ¹	2019–20	2020–21	2021–22
At Registration	11,699	23,439	24,388	25,293
At Case Management	4,548	12,891	11,779	10,622
At Rules Review	3,112	4,787	3,707	4,146
Preliminary Assessment	574	2,503	2,341	1,751
Decision	175	1,938	2,043	1,718

Average time taken to close banking and finance complaints

Time	2018–19 ¹	2019–20	2020–21	2021–22
Closed in 0–30 days	7,965	14,837	14,018	16,759
Closed in 31–60 days	7,012	15,347	13,678	13,398
Closed in 61–180 days	5,040	12,943	12,848	10,925
Closed in 181–365 days	91	2,080	2,037	1,634
Closed in in more than 365 days	0	351	1,677	814

¹AFCA commenced on 1 November 2018. The 2018–19 financial year covers an 8-month period (from 1 Nov 2018 to 30 Jun 2019). Year-on-year changes between 18–19 and 19–20 have been calculated pro rata using monthly averages.

AFCA can consider complaints about a range of banking and finance products and services including:

deposits to current accounts and savings accounts
banking payment systems including over the counter payments, ATM transactions, internet and telephone banking, secure payment systems, direct debits and foreign currency transfers
credit cards, overdrafts and lines of credit
buy now pay later arrangements
consumer leases and hire purchase arrangements
short-term finance such as payday lending
home loans, including reverse mortgages
personal loans such as car loans, holiday loans and debt consolidation loans
personal investment loans and small business loans
guarantees.

The types of issues and problems AFCA resolves include:

incorrect, dishonoured or unauthorised transactions, or mistaken payments
fees or charges that were incorrectly applied or calculated
incorrect, misleading or inadequate information about a product or service
a financial firm’s failure to respond appropriately to a customer in financial difficulty
decisions made by a financial firm, including whether a decision to lend was made responsibly
a financial firm’s failure to follow instructions
a financial firm’s response to reported scam activity
scams and whether the financial firm made an error when transferring funds
privacy and confidentiality breaches
inadequate service, including unreasonable delays or failure to assist a vulnerable customer.

Key insights:

AFCA, fortunately, has not seen the increase in hardship and overall complaints that might have been anticipated as a result of the COVID-19 pandemic and other environmental pressures.
We have seen an increase in resolutions between financial firms and complainants at the Registration and Referral stage of our process.
With changing economic conditions such as rising interest rates and cost of living. We expect further challenges for consumers and hope to see continued success in financial firms managing escalations and complaints before they require AFCA review.

AFCA received 42,392 banking and finance complaints in 2021–22, similar to the number of complaints we received last year. This was not as many as anticipated, given challenging conditions for consumers such as the COVID-19 pandemic and natural disasters that might have contributed to a higher rate of hardship and other complaints. It is likely that the stable, or even declining numbers of hardship complaints, is due to the proactive measures put in place by financial firms to address these challenges.

During the year, 43,530 banking and finance complaints were closed. Of the complaints closed, 25,293 complaints were closed at Registration and Referral, 10,622 were closed at Case Management, with 1,718 progressing through to the final Decision stage.

These numbers show that we continue to see a high proportion of banking and finance complaints being closed at the Registration and Referral stage, which means our members are finding ways to resolve these complaints themselves. The current rate (58%) is up on last year (55%).

This is a high rate compared to other product types and more impressive given changes to RG271, which came into effect on 5 October 2021 and set out new timelines and requirements for internal dispute resolution processes.

The average time taken to close banking and finance complaints was 60 days, with 38% closed between 0 to 30 days. This is a reduction from an average of 65 days in the previous financial year. The banking and finance decision team significantly reduced its queue and number of aged cases during the financial year.

Most complaints received were about credit cards (9,153), followed by personal transaction accounts (7,416) and home loans (6,439). Credit continues to attract the greatest proportion of complaints submitted to AFCA by product type, with banks being the most complained about organisation type.

Overall, the most common issues complained about were unauthorised transactions (6,174), service quality (5,677) and default listing (3,410). Further information is provided on the increasing level of scam complaints here.

In terms of AFCA’s priorities next year, we intend to issue an updated Responsible Lending Approach for broad industry, consumer and stakeholder consultation. Development and consultation will be managed through our Independent Review Response Program.

Work on other areas relevant to the banking and finance sector, such as development of our Scams Approach, is outlined in the Scams section.

“You conducted the investigation without bias, allowing fair timeframes and opportunity to present information. ”

Case study

Background

This complaint related to a loan the financial firm (the lender) provided to the complainant through a broker to purchase an investment property.

At the time, the lender was unlicensed and failed to make any enquiries into the affordability of the loan. The directors of the lender and the broker were each aware that the other had an interest in the transaction.

Findings and outcome

AFCA found that the loan was unsuitable for the following reasons:

the lender could have discovered through reasonable enquiries that the required repayments under the loan were unaffordable for the complainant and he was likely to be unable to repay it within the 12-month term
the consequences of the complainant defaulting on his repayment obligations were likely to be severe, including the sale of the security property and the possibility of a residual debt
the lender had knowledge of the significant conflicting financial incentives in place for the broker, and failed to put in place effective systems and processes to ensure information provided to them by the broker was accurate
under the circumstances, it was unreasonable for the lender to presume the broker was providing independent advice to the complainant
the lender dealt exclusively with the broker and not the complainant, depriving him of the opportunity to negotiate the terms of the loan contract
the lender did not meet its disclosure obligations under the National Consumer Credit Protection Act 2009 (Cth) (NCCP Act), so the complainant was not informed of the terms of the credit contract or the legal and practical effect of it
the lender engaged in unlawful credit activity by providing consumer credit while unlicensed, potentially depriving the complainant of protections under the NCCP Act and the National Credit Code.

In accordance with AFCA’s usual approach, AFCA determined the lender was not entitled to interest, fees and charges and the complainant needed to account for any benefit they had received from the credit.

AFCA also found the lender, not the complainant, should bear the investment risk.

Generally, AFCA would not require the lender to waive any shortfall after an investment property is sold, even where irresponsible lending was established. The basis for this approach is that, generally, we consider the investment risk lies with the borrower in an investment property purchase. However, whether this is appropriate and fair in the circumstances is assessed on a case-by-case basis.

In this case, because the lender had entered into an unjust transaction and was conducting unlawful credit activity, in addition to breaching responsible lending obligations, it was fair for the lender to bear the responsibility of the investment risk.

AFCA reduced the debt from approximately $750,000 to $320,000. The complainant was provided with a choice of time to sell the property, or to refinance.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

Case study

Background

The bank provided the complainants with a loan in April 2010. The loan refinanced the complainants’ existing home loan and provided them an additional $208,000 for investment purposes.

The complainants said the loan was unaffordable for them. The AFCA recommendation agreed the loan was unaffordable. The bank accepted the recommendation, but the complainants rejected the recommendation because the outcome would have required them to sell their family home to repay the adjusted loan within six months.

In the ombudsman’s view, it was unfair to require the complainants to repay the adjusted debt within six months for the following reasons:

one complainant had recently suffered a stroke and was unable to work, and the wife of the complainant had become his full-time carer
they were unlikely to be able to refinance the adjusted debt, so they would need to sell their home to repay the loan
they already owned their home before they obtained the loan from the bank.

In the interests of finding a resolution that met the needs of the parties, the ombudsman engaged with them before issuing the determination to explore possible outcomes that would enable the complainants to remain in their home.

Findings and outcome

The outcome of these discussions was recorded in the determination and assisted the complainants to stay in their home for a period.

The determination required that the lender to split the loan into two accounts:

the remaining balance of their pre-existing home loan, which was to be repaid by principal and interest repayments; and
the additional funds, which were subject to interest-only repayments. The bank was entitled to apply a 2% interest rate to that portion to offset the prejudice to the bank from waiting until the complainants no longer resided in the property.

Case studies are used to demonstrate AFCA’s approach to an issue and have been simplified for length and clarity.

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Annual Review 2021–22

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