Address by Professor John Pollaers OAM, and Chief Ombudsman and CEO David Locke – AFCA Annual General Meeting, 21 November 2024
A recording of the speeches can be found here. This speech should be read in conjunction with the recording.
Chair's address
On behalf of AFCA, I thank you for attending our 2024 Annual General Meeting.
This has been a year of significant achievement and change at AFCA. We successfully delivered several major projects whilst also handling record complaint numbers and responding to a dynamic regulatory and legislative landscape. I will talk more about this.
We launched our IT transformation in June this year. This involved the delivery of three integrated IT systems – a new case management system, an enhanced member portal and a new consumer portal.
These new systems replaced the legacy systems we had been using since AFCA’s establishment. They allow us to deliver a significantly improved experience for member firms, consumers and our people.
The introduction of targeted automation is already reducing the manual work required of firms, complainants and our people. This provides a much greater degree of autonomy and visibility. Firms and complainants can now upload and access documents; view where they are in the process; and access timeframes and due dates.
It’s been a long journey to arrive at this point. We worked closely with consumers and members to understand their needs and ensure the solution was fit-for-purpose.
Like any large-scale change, it has not been without challenges. But members – and complainants – are already telling us they are starting to see the benefits of these new and innovative ways of working with us. I thank members for your patience and support and the positive way you have embraced these changes.
Our three-year program to implement the recommendations of the Treasury-led Independent Review of AFCA is now complete. We have addressed all 13 recommendations for AFCA in the final report.
One notable achievement was the publication of our updated Rules and Operational Guidelines. These apply to all complaints lodged from 1 July 2024. Approved by ASIC, these revised rules and guidelines have been designed to enhance transparency and efficiency in our operations. Improvements include better management of unreasonable conduct; clearer guidance on excluded complaints; and enhanced transparency in our decision-making processes.
These changes reflect our commitment, not only to implementing the Review’s recommendations, but also to continuous improvement. It was gratifying to receive the results of an Independent Decision Review we sought from former Federal Court Judge, Julie Dodds-Streeton KC, and barrister, Ahmed Terzic, which assessed a randomly selected sample of complaint case files.
The reviewers were “impressed with the overall quality and standard of decision writing; AFCA’s ability to deliver fair process and outcomes”; and our overall service delivery to the parties, including people living in vulnerable circumstances.
We were pleased to see the CSLR start work in April 2024. At the Federal Government’s request, AFCA assisted with practical steps to get this up and running. It now stands on its own feet as a separate, independent organisation. The CSLR is an important consumer protection, supporting trust and confidence in the financial services sector.
We are deeply committed to advancing Reconciliation and addressing the needs of First Nations peoples. This resolve is evident in the completion of our Reflect Reconciliation Action Plan and our new Innovate Plan, and in our ongoing work to provide culturally respectful and accessible services. Our goal is to ensure that First Nations voices are heard and that the concerns of First Nations peoples are addressed effectively within our complaint resolution processes.
We expanded our community outreach in 2023-24. The AFCA Board held one of its regular meetings in Cairns. This was a valuable opportunity for Board members to hear first-hand the challenges faced by Aboriginal and Torres Strait Islander peoples, as well as non-Indigenous communities in Far North Queensland. We heard about the consumer detriment caused by issues such as insurance claim delays, mis-selling, aggressive debt collection, poor product design, scams and unethical practices.
The visit brought together over 20 consumer advocates from organisations working on the ground in communities. Their insights have contributed to our approach to providing culturally safe and effective services.
As we continue AFCA’s Reconciliation journey, our goal is to contribute to a fairer financial services system for all.
This year has been the final year of AFCA’s current three-year Strategic Plan. During this time, it has firmly established itself as a world-class Ombudsman service. AFCA now stands with the systems, the processes and the people to be able to embark on the next stage of its development, where the focus will be firmly on how it can continue to improve its services to all, including you, our members.
Before closing, I want to thank the staff at AFCA, for all their hard work, their commitment to customer service and the positive workplace culture they have maintained. It was wonderful to see the AFCA culture recognised in multiple workplace awards this year, including in the 2024 Australian Financial Review BOSS Best Places to Work and the Australian HR Institute Award for Employer of Choice.
I extend my gratitude to David Locke for his outstanding leadership.
My thanks also to the members of the AFCA Board for their invaluable guidance and support.
Lastly, I thank you, our members, for your constructive participation in the AFCA scheme.
CEO and Chief Ombudsman address
Thank you Chair. Good afternoon, everyone. I’m David Locke, Chief Ombudsman and CEO of AFCA.
I too would like to begin by acknowledging the Traditional Owners of the lands on which we meet today, and I pay my respect to their Elders past, present and emerging.
I also extend that respect to any First Nations People joining us today.
This land was, is, and always will be Aboriginal land and was never ceded.
Last year, for the first time in the AFCA’s short history, we received over 100,000 complaints.
This was driven by significant increases in scams, financial hardship and general insurance.
In 2023, the National Anti-Scam Centre (or NASC) reported that Australian consumers lost a staggering $2.7 billion to scams.
AFCA saw an 81% increase in scam-related complaints in the last year, totalling just under 11,000 complaints. This is more than 900 a month.
Pleasingly, we did see a reduction in the last quarter of the financial year and we hope this trend can continue.
Scams are an insidious problem, a scourge of the modern age, and behind each statistic is an individual who has suffered not just financial loss but also trauma as a result of this criminal activity.
We welcome the work of the NASC, ACCC, ASIC, ACMA and the many industry initiatives to address this, including, importantly, the Banking Accord.
Steps like account name checking by banks, developments in secure banking apps, and restrictions on payments to cryptocurrency, are already making a real impact. But more needs to be done.
We welcome the Government’s Scams Prevention Framework Bill and hope to see its swift passage through Parliament. We believe it will be a gamechanger in the detection, prevention and disruption of scams and in providing appropriate responses. It will enable real time sharing of intelligence; introduce important reporting requirements; put obligations on social media platforms and other digital platforms and telecommunications providers; in addition to setting out clearly what more the banks need to do.
The e-payments code was developed before the era of scams and was never designed to deal with this issue. We urgently need the mandatory codes provided for in this legislation and we all need to work together to shift Australia from being a location of choice for scammers to a place of last resort.
The human misery that scams cause is immense and maintaining the status quo in terms of law, regulation and consumer protection is not an acceptable option.
It is imperative that everyone can transact safely; and that everyone is treated fairly when things go wrong.
AFCA has also seen a concerning rise in the number of complaints related to financial hardship. Last year saw an 18% rise in these complaints to AFCA. A substantial proportion of these concern home loans but also motor vehicle and other personal loans
Australia is undergoing a cost-of-living crisis, with inflation and high interest rates adding stress to the budgets of Australian consumers.
ASIC’s recent review on financial hardship support identified significant challenges in accessing hardship assistance. The review stated that a third of applicants faced so many obstacles that they abandoned their applications.
We have noticed an alarming increase in complaints where lenders had not responded to or addressed financial hardship requests.
Many of these were associated with smaller lenders and Buy Now Pay Later schemes.
However, there were also issues with larger lenders where standardised and automated processes failed to account for an individual’s particular circumstances.
In some circumstances, we observed troubling practices such as the issuing of default notices to consumers who had already reached new repayment arrangements, which clearly is unacceptable.
Last year, we raised more systemic issues about hardship practices than ever before, and it remains a focus of our attention.
We look forward to continuing to work with lenders and peak bodies to reduce these problems.
We have spoken about delays in claims and complaints handling in General Insurance before. These issues remain a concern for AFCA and the regulators. Motor vehicle insurance claims are particularly a problem.
Pleasingly, we have seen a couple of large insurers make good progress in addressing key concerns. But we need to see more.
We welcome the recommendations from the House of Representatives Inquiry into the Insurers’ response to the 2022 floods and the recommendations from the review of the General Insurance Code. Together they present a way forward for the General Insurance industry; and we will continue to work in partnership with insurers, as well as calling out where more needs to be done.
Throughout this year, we have called out the delays we have seen with claims handing by Superannuation Funds, particularly regarding death payments and total and permanent disability claims. We have reported Systemic Issues to the regulators about this conduct. In meetings and public presentations, we have highlighted the issue and the action that must be taken. ASIC has a strong regulatory focus on this, and the first enforcement action has commenced. We urge all funds to get their house in order and ensure that claims are promptly and properly handled, and that the vulnerabilities that consumers experience, at these very difficult times in their life, not only are understood but are properly responded to.
AFCA continues to make substantial efforts to engage with industry, community organisations, government, regulators and global partners to share knowledge, gain insights and improve outcomes. We have worked with many domestic regulators and ombudsman schemes, as well as sharing best practice internationally. We have appeared before a number of Parliamentary Committees and responded to multiple consultations on matters relevant to AFCA’s role and jurisdiction.
In closing, I wish to thank AFCA’s Chair and the Board for their continued support and diligent governance. Their dedication ensures we remain focused on our mission to serve the Australian community with integrity and accountability.
I also wish to congratulate AFCA’s Chair, Professor John Pollaers OAM, on his reappointment for a second term.
I look forward to working with him and the Board as we continue to further AFCA’s mission.
To AFCA’s exceptional staff: thank you.
In what has been a challenging year with record numbers of complaints, increased workloads, transformational change in systems, you have shown resilience and dedication.
To you, our members, I thank you for the open and collaborative way you have continued to engage with AFCA and our people. AFCA’s new vision is “Towards an Australia free from financial disputes”. This is something we can all work to, as minimising the causes of disputes, and early resolution, is in the best interests of everyone.
Thank you.