The Australian Financial Complaints Authority (AFCA) received 72,358 complaints from Australians in dispute with insurers, super funds, banks, investment firms, and financial advisers from July 2021 to July 2022 (FY21-22), a 3% increase from the previous financial year.
Among the largest financial firms, the top four insurers accounted for around 9,400 complaints, up 19% from the previous financial year. Meanwhile, the top four banks accounted for nearly 20,000 complaints, a 10% increase from the same period. However, the total number of complaints against licensed financial firms in Australia was 5% lower than in the previous 12 months.
Among the complaints, personal transaction accounts, home loans, home building insurance, and motor vehicle insurance were the top 5 most complained about products or services in 2021-22. Additionally, AFCA had received complaints about Youpla – previously the Aboriginal Community Benefit Fund (ACBF) – from 2021 to 2022. However, it paused work on complaints after the funeral insurer went into liquidation early this year.
AFCA chief ombudsman David Locke pointed to natural disasters as the main driver of the increase in complaints in FY21-22, with 1,586 lodged, more than double the 653 complaints from such disasters lodged in the previous year. Specifically, the national ombudsman service had received a sharp increase in general insurance-related complaints in a period that included an earthquake in Victoria in September 2021, as well as the catastrophic storms and flooding across southern states in October 2021 and southeast Queensland/northern New South Wales (NSW) in February-March 2022. The complaints mainly revolved around delays in claims handling in home building, home contents, and motor vehicle insurance.
“We acknowledge that insurers face challenges as they try to manage claims and get people back on their feet,” Locke said. “We know there are significant issues with the supply of things like building materials, parts, and labour because of national and global events outside their control.
“Notwithstanding this, we are concerned at the rise in complaints being escalated to AFCA. We want to better understand the causes of complaints, and we're eager to work with insurers to help them resolve disputes more quickly and, ultimately, to prevent them.”
On the bright side, Locke revealed that half of the complaints that reached AFCA were resolved quickly at the earliest stage, with 67% of complaints resolved by agreement between the parties.
AFCA has now helped to secure over $820 million in compensation and refunds since its operations started on November 1, 2018.