The 2023-24 year has been a period of change and growth for AFCA, with complaints rising above 100,000 for the first time, with scams, financial hardship and general insurance complaints handling being significant drivers.

Scams

One of the most concerning trends this year has been a dramatic increase in scam-related complaints, reaching nearly 11,000.

In 2023, Australian consumers lost a staggering $2.7 billion to scams, according to the Targeting Scams report by the National Anti-Scam Centre (NASC). That was down from $3.1 billion in value the previous year, but the volume of scam reports was up 19% to 601,000.

AFCA itself saw a surge in scam-related complaints in 2023-24, with a rise of 81%.

We have welcomed the work of the NASC, Australian Competition and Consumer Commission (ACCC), ASIC, Australian Communications and Media Authority (ACMA) and industry initiatives to address this, including the Banking Accord.

We welcome the Government’s announced Scams Prevention Framework and look forward to its passage through Parliament. AFCA is well placed to deliver external dispute resolution (EDR) services across the Banking, Telecommunications and Digital Platform sectors, if the Government and Parliament endorse that approach.

We continue to work with Government, industry and others to find ways to identify, disrupt and report this insidious criminal activity, which causes so much human misery.

Financial hardship

Another significant issue of concern this year has been the rise in complaints related to financial hardship.

ASIC’s recent review, Hardship, hard to get help – Lenders fall short in financial hardship support, identified significant challenges in accessing financial assistance and revealed that a third of hardship applicants faced so many obstacles that they abandoned their applications.

This mirrors trends in AFCA’s own complaints data, which shows insufficient support by industry for many individuals in financial difficulty. Complaints in this area were up 18% over the past year, with a substantial portion relating to home loans.

Many complaints were about failures by lenders to properly respond to, or adequately address, hardship requests. This was more pronounced among smaller lenders and buy now pay later (BNPL) providers, though there were also issues among larger lenders where, for instance, automated processes can fail to account for individual circumstances. 

We also observed troubling practices such as issuing default notices to consumers who had reached new repayment arrangements. 

We welcome the steps some lenders have taken, such as investing in specialist hardship teams and improving processes, but the increased number of complaints suggests further work is needed.

General insurance complaints handling

AFCA has been actively engaging the Insurance Council of Australia (ICA) and individual insurers to address the factors driving the high volumes of general insurance complaints. A few insurers have made progress, but for many we have yet to see significant momentum towards sustained improvements.

One significant observation is the causal link between delays in claim handling following natural disasters and the conclusion that there are capacity or resourcing issues at play.

Motor vehicle complaints remain a primary driver of complaint volumes, with delays in claim handling cited as the number one issue. Insurers have the power to improve resolution rates in this area, which is also an obligation under the reforms to claim handling and settling services that came into effect on 1 January 2022.

Over the past two years, consumers have faced a record level of premium growth in both car and home insurance. Despite this, we remain disappointed with the lack of action regarding appropriate resourcing, product design and the adoption of a resolution mindset.

Wider engagement

Meaningful interactions with industry, community, government, regulators and global partners in the past year allowed us to tap into critical insights from others and make our own contributions to important discussions and consultations.

Our contributions addressed initiatives for tackling the harm from scams, regulatory reform for BNPL services, proposed amendments to the Banking Code of Practice, and insurers’ responses to the 2022 major floods claims, among other topics.

We accepted invitations to appear before Senate Estimates (AFCA is not a Federal Government agency, so was not required to attend) and a number of other Parliamentary committees.

Globally, we engaged with delegates from the Monetary Authority of Singapore, the Indonesian Banking Development Institute, the Financial Services Authority of Indonesia, dispute resolution experts from China, the Financial Ombudsman Service in the UK, and the Financial Industry Disputes Resolution Centre in Singapore.

Thank you

I wish to extend my sincere gratitude to AFCA’s Chair and Board for their steadfast support and diligent governance. Their dedication ensures we remain focused on our mission to serve the Australian community with integrity and accountability. I congratulate AFCA’s Chair, Professor John Pollaers OAM, on his reappointment as Independent Chair for a second term and greatly look forward to continuing to work with him and the Board on the next stage of AFCA’s development.

To AFCA’s exceptional staff: your unwavering commitment to fairness and justice is the bedrock of our service. In what was a challenging year, with record complaints meaning an increased workload, you showed resilience and dedication in ensuring complainants and firms received the best service possible. You have focused your efforts on fairness, helpfulness and kindness and I am profoundly thankful.

As we embark on our work in 2024-25, I am invigorated by the professionalism and passion that characterise the AFCA team and Board. Together, we remain resolute in our mission, prepared to meet challenges head on and continue our essential work.

David Locke
Chief Executive Officer and Chief Ombudsman

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