Annual Review 2022–23
Contents
- 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
- Complaints
- 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
- Cryptocurrency
- 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
- Glossary
Top five cryotocurrency complaint issues received
| Issue |
Total |
|---|---|
|
Unauthorised transactions |
54 |
|
Failure to follow instructions/agreement |
36 |
|
Service quality |
16 |
|
Mistaken internet payment |
15 |
|
Interpretation of product terms and conditions |
14 |
Stage at which cryptocurrency complaints closed
|
Stage |
2022–23 |
|---|---|
|
At Registration |
65 |
|
At Case Management |
48 |
|
At Rules Review |
21 |
|
Preliminary Assessment |
8 |
|
Decision |
11 |
Time taken to close cryptocurrency complaints
|
Time |
2022-23 |
|---|---|
|
Closed in 0–30 days |
41 |
|
Closed in 31–60 days |
38 |
|
Closed in 61–180 days |
63 |
|
Closed in 181–365 days |
10 |
|
Closed in in more than 365 days |
1 |
About cryptocurrency
Cryptocurrency is an electronic internet-based virtual currency. As cryptocurrency is not regulated as a financial product under the Corporations Act, providers of cryptocurrency or digital assets are generally not required to be AFCA members. However, some have joined voluntarily, or as a condition of membership of an industry association.
In 2022–23, AFCA received 216 cryptocurrency complaints, with 153 cases closed. Of the closed cases, 65 (42%) were resolved promptly at the initial Registration and Referral stage.
Unauthorised transactions (including scams) received the most complaints with 54, or 25%, of the total. Complaints about failure to follow instructions or agreements was next with 36 (17%), followed by service quality issues with 16 (7%), mistaken internet payments with 15 (7%), and interpretation of product terms and conditions with 14 (6%).
Of the total 153 cases closed, 41 (27%) were closed within 30 days, and 38 (25%) between 31 and 60 days.
Case study – Scam activity on a cryptocurrency account
Background
In November 2017, the complainant opened a cryptocurrency account with a financial firm, into which she transferred approximately US$70,000 from her bank account. She then transferred her cryptocurrency to an account with a third party. The complainant said the third party turned out to be a scammer, from whom she was unable to recover the cryptocurrency.
The complainant also unsuccessfully sought to recover the cryptocurrency from the financial firm, which she claimed had inadequate risk management, and had failed to meet its obligations under anti-money laundering and counter-terrorism financing laws.
The financial firm said it provided an execution-only platform and had no reasonable basis to be aware that the complainant was being scammed by a third party.
Findings and outcome
The ombudsman found that the financial firm acted with reasonable care and skill when providing its service by implementing multiple security measures to ensure the transactions were authorised. On each occasion, the complainant confirmed that she wished to proceed with the transfer.
The financial firm provided numerous warnings about potential scams, including:
- in the financial firm’s terms and conditions
- when the account was first opened
- in the security recommendation on the financial firm’s website, which highlighted the risks of sending coins off the platform as these transactions were irreversible and not traceable
- via a confirmation email when the complainant performed off-platform transfers
- in a phone call to the complainant to confirm the validity of the transaction, which the complainant acknowledged and assured the financial firm she wished to proceed.
The ombudsman found there was no evidence the scammers were clients of the financial firm (which was required to know its clients).
While the financial firm had an obligation to submit suspicious matters to AUSTRAC, the ombudsman noted it was not required to inform clients about the reports, or block a transaction, unless it was under investigation or had explicit instructions to block it.
