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
BNPL complaints received
BNPL complaints closed
Stage at which BNPL complaints closed
|
Stage |
2023-24 |
|---|---|
|
At registration |
1,186 |
|
At case management |
547 |
|
At rules review |
155 |
|
Decision |
27 |
Top five BNPL complaint issues (received)
|
Issue |
2023-24 |
|---|---|
|
Credit enquiry |
244 |
|
Unauthorised transactions |
237 |
|
Default listing |
147 |
|
Interpretation of product terms and conditions |
131 |
|
Incorrect fees costs |
118 |
Time taken to close BNPL complaints
|
Time |
2023-24 |
|---|---|
|
Closed in 0-30 days |
593 |
|
Closed in 31-60 days |
706 |
|
Closed in 61-180 days |
510 |
|
Closed in 181-365 days |
103 |
|
Closed in more than 365 days |
3 |
Key complaint and industry trends
Increase in complaints
Complaints related to buy now pay later (BNPL) schemes rose by 16% in 2023-24, reaching 1,929 compared to 1,668 in the previous year.
Default listing complaints
Complaints about default listings saw a dramatic 101% increase, reaching 147 cases, although the overall number is still low.
Product terms and conditions
Issues concerning the interpretation of BNPL product terms and conditions also increased, with complaints rising 75% to 131 cases.
Limited visibility
Despite the increase in BNPL complaints, AFCA’s visibility is limited as we only handle complaints from members. Many BNPL providers are not AFCA members, and membership is required only for those adhering to the voluntary BNPL Code or licensed by ASIC.
Consumer concerns and small compensable losses
Consumers may be reluctant to pursue complaints at the Internal Dispute Resolution (IDR) stage due to fears of losing access to their BNPL accounts. Additionally, small compensable losses may diminish the incentive to pursue complaints.
Upcoming regulatory changes
The Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 proposes new responsible lending obligations for BNPL arrangements and aims to require BNPL providers to join the AFCA scheme. AFCA is preparing for these changes should the legislation pass and is committed to assisting industry members in meeting fairness standards and EDR requirements.
Case study – Disputed transactions
Background
The complainant used a BNPL service provided by a financial firm, which offers a virtual card that can be loaded into a digital wallet for contactless payments. The transactions are split into instalments paid overtime through the customer’s linked payment method.
Complaint
The complainant disputed four transactions on her BNPL account, alleging they were unauthorised. The complainant speculated that her account might have been compromised when she used it for a contactless payment at a retailer. She claimed she did not make the disputed transactions and was unsure how they occurred.
Outcome
The financial firm provided evidence showing that the disputed transactions were made using a virtual card that the complainant had used for other undisputed transactions, which she confirmed. The firm explained that virtual cards are device-specific; if created on a different device, they have a different identifier.
Despite the complainant’s suspicion that a retailer hacked her account during a contactless payment, there was no supporting evidence. The complainant had not handed her phone over to the retailer or anyone else during the transaction. AFCA found insufficient evidence to support the claim of a hack and concluded that the complainant likely authorised the disputed transactions. Therefore, the financial firm was justified in treating the transactions as authorised.
Case study – The importance of BNPL providers adhering to proper debt collection practices
Background
The complainant entered into a payment arrangement with a BNPL provider to address an outstanding debt of $361.47. Despite adhering to this arrangement, the complainant faced issues when the BNPL provider failed to follow proper debt collection practices and sent a default notice demanding the full amount of arrears.
Complaint
When the complainant challenged the default notice with supporting evidence and requested details about the payments and debt amount, the BNPL provider took two weeks to respond. When the financial firm did respond, it re-asserted its right to the full amount of the arrears and threatened to list a default on the complainant’s credit file.
Outcome
AFCA determined that the BNPL provider’s actions violated industry standards and caused significant distress to the complainant.
As a result, the complainant was awarded $2,000 in non-financial loss compensation for the provider’s misconduct.
An additional $1,000 in non-financial loss compensation was granted due to the provider’s failure to suspend debt collection activities during the AFCA complaint process, exacerbating the complainant’s stress and inconvenience.
This case underscores the importance of BNPL providers adhering to proper debt collection practices and ensuring transparent, respectful communication with consumers.
