- About this Annual Review
- Year at a glance
- Acknowledgement of country
- Board Chair message
- Chief Executive Officer and Chief Ombudsman message
- Organisational overview
- AFCA Independent Review
- Who complained to AFCA?
- 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
- Complaints lodged by Aboriginal and Torres Strait Islander peoples
- Complaints lodged by consumer advocates and financial counsellors
- Complaints lodged by paid representatives
- Complaints outside AFCA’s Rules
- AFCA’s Systemic Issues function
- AFCA’s Code compliance and monitoring functiong
- Engagement, awareness and accessibility
- Corporate information
- AFCA General Purpose Financial Report
It has been a landmark year for AFCA and the financial services industry. In 2022–23, we saw a record number of complaints, driven largely by delays in insurance claim handling, mounting financial pressures on consumers, and the ongoing scourge of serious financial crime and scams. We also saw the introduction of significant consumer protections, including the Australian Government’s move to regulate buy now pay later (BNPL), an overhaul of laws to govern 'payday' lending, the establishment of the National Anti-Scam Centre and the introduction of a Compensation Scheme of Last Resort (CSLR).
Compensation Scheme of Last Resort
In June, we were delighted to welcome the passage of legislation that established the CSLR – a scheme AFCA and our predecessors have consistently advocated for, and that was a recommendation of the Hayne Royal Commission. The CSLR strengthens protections for Australian consumers and, in turn, builds trust in our financial services sector and dispute resolution system.
The CSLR will facilitate payments of up to $150,000 to eligible consumers who have an unpaid AFCA determination that awarded compensation for complaints in personal financial advice, credit intermediation, securities dealing and credit provision.
We are pleased for those eligible under the legislation to lodge CSLR claims, but also acknowledge that those who don’t qualify will be disappointed. More information about the CSLR and its scope can be found on the CSLR page.
In 2022–23, we received 96,987 complaints from consumers and small businesses, which was more than 8,000 a month on average. This was a big jump from 6,000 monthly complaints in 2021–22 and just over 5,800 in 2020–21. We resolved 86,185 complaints and awarded $253.8 million in compensation and refunds to consumers and small businesses.
We also identified more than 1,000 potential systemic issues and reported 105 systemic issues to federal regulators, delivering an additional $100 million in refunds to 378,830 consumers.
Insurance complaint volumes and delays
There was a 50% increase in general insurance complaints to AFCA this year. Many of these cases could have been resolved before they reached the external dispute resolution (EDR) phase and avoided AFCA altogether. Insurance complaints progressing to Case Management from Registration and Referral also grew by 52%, meaning more complaints required an AFCA investigation.
While AFCA acknowledges that external pressures, such as the South East Queensland and northern NSW floods with accompanying supply chain problems and labour shortages, played a role, the consistent influx of insurance complaints over the year points to broader systemic challenges. A significant number (89%) of general insurance complaints were not directly linked to such events.
As natural disasters increase, insurers must strike a balance between unforeseen challenges to daily operations and the way they deal with customers. We urge the insurance sector to do more to improve both their internal dispute resolution practices and customer communications.
AFCA’s response to delays in our process
To help us cope with increased complaint volumes and poorer firm performance, we have made strategic changes, including enhancing our technology and reallocating resources. We now group similar complaints and have improved how we assign unresolved complaints to our case workers, and update people on their complaint's progress.
Our team's dedication and these improvements have seen average resolution times this financial year drop to 69 days, slightly better than 72 days last year. Aged cases remain minimal at 0.9%.
The large increase in complaints has nevertheless put significant pressure on AFCA’s resources. While we have made some headway to improve timeliness, we acknowledge that many complainants are still experiencing delays. We will continue to monitor complaint queues closely, as we investigate and implement new initiatives to support early resolution.
Financial crime and scams
This year, we had more complaints about personal transaction accounts than credit cards. This was a significant shift since credit cards have been the most common complaint product since AFCA commenced. The change was influenced, in part, by a 46% rise in serious financial crime and scam-related complaints, now averaging more than 500 a month – 6,048 for the year.
The human misery caused by financial scams is something we witness daily. While some banks have taken positive steps to protect consumers, not enough is being done, and there is no consistency in approaches. Consumers continue to bear the bulk of the losses from this financial crime, yet the level of sophistication and complexity of scams makes it very difficult for people to protect themselves from this activity.
We applaud the Government's initiative in setting up the National Anti-Scam Centre and we support strong mandatory and enforceable codes for banks, telecommunications companies and digital platforms. We also believe that a code governing superannuation funds is necessary. AFCA believes there is a pressing need for strong, uniform protections for consumers.
Hardship, mortgage cliff and other credit types
In the latter part of the year, AFCA saw a significant rise in complaints caused by the financial stress of rising interest rates and living costs. While the number of financial difficulty complaints to AFCA was just 9% higher than in the previous full year, cost-of-living pressures became increasingly evident in the final quarter of 2022 –23, when hardship complaints were up 31% compared with the same period last year.
Home loan, credit card and BNPL complaints also spiked toward the year's end, as people sought alternative lines of credit to navigate stretched budgets.
We urge banks and other financial institutions to remain proactive in identifying and assisting customers under financial strain. We are pleased to see the banking and finance sector continue to resolve complaints early, despite increased volumes.
Engaging with industry
It is part of AFCA’s vision to improve practices and minimise disputes. The Board and I are deeply committed to sharing ACFA’s insights and data to help achieve this. Building and maintaining meaningful relationships with a wide array of partners is vital. It not only ensures we can encourage better practices, but it helps inform positive changes.
We interact both with our direct stakeholders, and others in different industries and across international borders. This includes exchanging experiences to fortify Australia's dispute resolution framework and engaging with other ombudsman schemes (see following section).
Our commitment to dialogue and understanding our stakeholders’ challenges is evident in our regular interactions with the Boards of significant institutions such as major banks and insurers. Through these conversations, we share observations and discuss challenges like scams and rising complaints.
Our collaboration extends to co-chairing important industry discussions. For instance, we co-hosted a roundtable with the Insurance Council of Australia. Senior executives of leading insurers and representatives from regulatory bodies such as the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), focused on surging general insurance complaints. Together, we can find sustainable solutions.
We have also connected with ombudsman schemes across the world, including the UK, Singapore, South Africa and Canada, to gain insights into their IT transformations and to ensure we know about best practices that AFCA can apply.
Our international engagement has a focus on the rising issue of scams. We have collaborated with international ombudsman schemes, such as the UK's Financial Ombudsman and Singapore’s Financial Industry Disputes Resolution Centre, to deepen our understanding of this issue.
Our CEO, David Locke, addressed the Reserve Bank of India's Ombudsman Conference in Jodhpur last October. ACFA also met with the Central Bank of Uzbekistan, which is considering establishing its own financial ombudsman scheme. We proudly shared the story of AFCA's inception and operational model.
Over the year, AFCA shared vital complaints data and insights with the Government, spotlighting challenges faced by consumers and financial firms. This included routine discussions with Parliamentary Committees, regulators, Treasury and other Government Departments.
We also briefed ministers and other members of Parliament on complaints relevant to their communities, emphasising natural disasters and significant events.
Engaging consumer groups
We continued our regular Consumer Advisory Panel and Consumer Advocate liaison meetings. By bringing together leaders and representatives from advocacy, financial counselling and community legal services, we keep in touch with the concerns and needs of our diverse community.
Our business and IT transformation
AFCA is undergoing a major business and IT overhaul. We’re transitioning away from legacy case management systems to state-of-the-art integrated technologies and processes. Soon we'll introduce three new systems: one for AFCA case management, plus a consumer portal for complainants and their representatives, and another for our financial firm members. Automation will help us streamline operations, elevate our team’s experience and offer members, consumers and small businesses the advantage of self-service tools, as well as real-time information and insights.
Our commitment to reconciliation
In response to the Uluru Statement from the Heart, AFCA stands by Australia's First Nations peoples in pursuing a constitutionally enshrined Voice.
AFCA's commitment to reconciliation is at the core of our mission as a national ombudsman scheme. We aim to provide First Nations peoples with empowering, culturally respectful, informed, adaptable and accessible services. We acknowledge the significance of oral storytelling and are working to ensure the voices of First Nations peoples are heard on financial matters.
In December, we introduced our Reflect Reconciliation Action Plan (RAP). It outlines actions we have committed to over the past year, such as instilling a deeper understanding of First Nations peoples' cultures throughout AFCA; fostering stronger, respectful relationships and improving opportunities for First Nations peoples.
Looking ahead and thank you
Thank you to AFCA’s diligent employees, led by our dedicated CEO and leadership team. I deeply appreciate your commitment and the approachable, supportive and equitable service you all provide.
The Board’s guidance has also been instrumental in AFCA’s success, and I thank everyone for their contribution. This year, we farewelled Alan Wein and Elissa Freeman and welcomed Delia Rickard and Gerard Brody.
The year ahead brings great promise. In April 2024, the CSLR is scheduled to open for applications. Although entrusted to us by the Australian Government to set up the CSLR company, it will stand as a separate independent entity, governed by its own board. We are also excited about the service improvements our IT transformation project will bring.
I offer another heartfelt thank you to every team member who shaped AFCA’s remarkable year. We look forward to more challenges and triumphs in the year ahead.
John Pollaers OAM
AFCA Board Chair