Australians – including SMEs – have lodged over 73,000 complaints about banks and other financial service providers over the past year, with millions paid out in compensation.
The Australian Financial Complaints Authority (AFCA) revealed that it has awarded $185 million in compensation, after it received a total of 73,272 complaints from Australians – up 40 per cent on the equivalent received a year earlier by the Financial Ombudsman Service and other dispute resolution bodies merged to create AFCA in November 2018.
Of these, 3,869 were from small businesses.
However, as lead ombudsman for small business Geoff Browne previously flagged, that number is likely to be far higher, given that many complaints come through as individuals but the underlying problem relates to a business issue.
Mr Browne told My Business in September that “it could be anything up to double” the volume of complaints actually relating to a business.
Of the nearly 4,000 disputes that were prescribed as being from a small business, the majority involved allegations of misleading product or service information.
In addition to individual matters raised, AFCA said that it currently has 50 systemic under active review, and that it has identified 30 instances of “potential serious contraventions and other breaches” of rules governing the sector.
What do most disputes relate to?
According to AFCA’s breakdowns of all the disputes it has received in the year to October 2019, 25,826 (or 35 per cent) involve banks.
General insurers attracted 14,139 (19 per cent) of complaints. Rounding out the top five most complained about sectors were:
- credit providers, with 10,327 complaints (14 per cent)
- super fund trustees of advisers, with 2,999 complaints (4 per cent)
- debt collectors or buyers, with 2,902 complaints (4 per cent)
What are the root causes of these disputes?
AFCA revealed in its 12-month snapshot that the most contentious issues in each area of financial services are as follows:
- credit – credit reporting
- general insurance – the claim amount, followed very closely by delays in handling a claim
- deposit-taking – unauthorised transactions
- superannuation – incorrect fees and costs
- payment systems – unauthorised transactions
- investments – failure to follow instructions/agreements
- life insurance – denial of a claim
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.
- Australian manufacturers can create their own stimulus
- Here’s what separates success from the rest
By Adam Zuchetti
- 5 workplace trends to watch in 2020
By Nicole Gorton