The Australian Financial Complaints Authority (AFCA) has expressed disappointment at another record year of complaints, after disputes reaching the ombudsman service rose a further 9 per cent to more than 105,000 in 2023-24.

“While we haven’t seen the scale of increase we experienced a year ago, these record numbers are still too high,” Chief Ombudsman David Locke said of the 105,454 complaints in 2023-24. This followed an unprecedented 34 per cent jump in complaints a year earlier.

“We are disappointed we haven’t seen a reduction. Our view is that firms could be resolving more complaints themselves, or preventing them in the first place,” Mr Locke said. “We continue to take steps to be able to keep up with the increasing demand for our service, but it’s in everyone’s interests that rising complaints are tackled at the source.”

The preliminary data snapshot showed scams were a key driver, along with a surge in complaints about comprehensive motor vehicle insurance, contributing to record complaints in the banking and finance and general insurance sectors.

Banking and finance complaints rose 11 per cent to 59,636 and general insurance complaints 4 per cent to 29,096, as of the preliminary snapshot at June 30.

Scam-related complaints rose 81 per cent to 10,951 in 2023-24, averaging 913 a month compared with 504 a month the previous financial year. That was reflected in personal transaction accounts being the most complained about product overall, while transactions that customers considered unauthorised were the most common issue in complaints to AFCA in 2023-24.

“We saw scam-related complaints dip a little towards the end of the year, possibly reflecting recent government and industry efforts to prevent and address scams,” Mr Locke said. “Our hope is that this improvement continues in the coming year.”

Mr Locke said AFCA looked forward to the results of the government’s work on mandatory codes addressing scams. “Clearer obligations will help us, as an ombudsman service, in resolving complaints about the way a financial firm has handled the fallout from a scam.”

Mr Locke noted that AFCA had started to see instances of sophisticated scam activity in the superannuation sector. “We urge super fund trustees to review the steps they have in place to protect members from fraud,” he said. “The fact that scam and unauthorised transaction complaints in super are still low means there’s a window of opportunity for trustees to act so we don’t experience the sorts of issues seen elsewhere.”

Mr Locke said that while the rate of increase in general insurance complaints had moderated in 2023-24 – after jumping 50 per cent the previous year – complaints for this sector were at a record high for the second year running. “We are disappointed the sector has not yet been able to achieve sustained improvement,” he said.

A 21 per cent surge in complaints about comprehensive motor vehicle insurance meant it overtook home building cover as the most complained about insurance product in 2023-24. Claim delays accounted for a third of these vehicle insurance complaints, and delay in claim handling remained the top issue in general insurance overall.

Amid higher interest rates and increased costs of living, complaints involving financial difficulty rose 14 per cent to 5,525 in 2023-24. Home loan complaints accounted for one in three of those complaints (1,828).

The fact this number was not even higher could be seen as testament to the impact of laws requiring responsible lending, Mr Locke said. AFCA would continue to closely monitor financial difficulty complaints in 2024-25, after raising concerns earlier this year about lenders’ handling of applications for hardship assistance.

“Lenders should respond quickly when people start to experience financial difficulty, providing appropriate support that’s tailored to the individual,” he said. “We don’t want to see complaints where a once salvageable situation has become dire.”

Note: AFCA’s full set of data will be available in the Annual Review later this year. The data provided in this Media Release is preliminary and some numbers may change after further analysis and classification.

Table: 5 most complained about products

Source: AFCA preliminary data snapshot as at 30 June 2024

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.