Small business complaints to the Australian Financial Complaints Authority (AFCA) reached a record high in 2023-24, with the national financial ombudsman service also monitoring a rise in financial difficulty complaints amid challenging economic conditions.
Small businesses took 4,466 complaints to AFCA in 2023-24, a rise of 17 per cent on the previous financial year.
“This record number of complaints to AFCA reflects the pressure small businesses are under as they struggle to manage challenges with cash flow and financing, along with higher costs and interest rates,” AFCA’s Lead Ombudsman for Small Business, Suanne Russell, said.
“We expect financial difficulty complaints to continue to rise in the coming year,” Ms Russell said. “We encourage small businesses to talk to their financial service providers if they are facing challenges, and we urge financial firms to adequately address requests from customers if they need help to get through temporary difficulty.”
In addition, small businesses lodged 263 complaints in relation to scams in 2023-34, a rise of 48%.
Small businesses were targeted by email compromise scams in particular, where scammers intercept and alter payment details. These scams can result in substantial losses, especially in property settlements and large transactions.
With limited resources to dedicate to fraud prevention, and often larger amounts in accounts, small businesses could be vulnerable to scams, Ms Russell said.
“Scams are a growing threat to small businesses and can have a significant impact on business owners. We believe financial service providers should enhance protections for their small business customers to help prevent these damaging losses.
“We also welcome the introduction of legislation for the government’s Scams Prevention Framework, which aims to enhance scams prevention as well as the response to consumers and small businesses impacted by scams.”
Business loans were again the most commonly complained about financial product in complaints from small businesses to AFCA, rising 16 per cent. The top five products were rounded out by complaints related to business transaction accounts, commercial property, credit cards and commercial vehicles.
“This year we saw an 84 per cent increase in complaints around interpretation of product terms and conditions – again, we encourage financial firms to make sure they’re communicating clearly and effectively with small business customers,” Ms Russell said.
Last financial year, AFCA closed 4,380 small business complaints, securing $20 million in compensation for small businesses in cases where complaints were upheld.
AFCA provides an independent and impartial financial complaints resolution service that is free for small businesses and individual consumers.
Media enquiries: media@afca.org.au
About AFCA
The Australian Financial Complaints Authority (AFCA) is a non-government ombudsman service providing free, fair and independent dispute resolution to individual consumers and small businesses when they are not able to resolve complaints directly with financial firms in banking and finance, insurance, investments and advice, and superannuation. AFCA aims to help the parties reach agreement, but it can issue decisions that are binding on financial firms.
