Common complaints include decisions made by financial firms on responsible lending
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The Australian Financial Complaints Authority (AFCA) reported that it received more than 13,000 phone inquiries during its first month of operation – 6,522 of which came from consumers and small businesses complaining about financial products and services.
AFCA receives an average of 310 complaints each business day since opening on 1 November. This is an increase of over 47% compared to its three predecessor schemes.
Broken down, around 45% of the complaints AFCA received have been about credit, 21% and 10% were about insurance and deposit taking respectively, and 8% were about superannuation. AFCA also revealed that banks were the provider type most consumers and small businesses complained about, with 2,367 complaints, followed by insurers with 1,159 complaints, and credit providers with 1,040 complaints. Less than 6% of AFCA’s licensee members received complaints in November.
The most common complaints revolved around decisions made by financial firms, including issues connected to insurance claim denials and responsible lending.
Encouraging cooperation and collaboration
David Locke, CEO and chief ombudsman at AFCA, told MPA that complaints are resolved using methods they think are more likely to address grievances fairly and efficiently. Complainants can lodge their grievances online, over the phone, or by traditional mail.
Locke said AFCA is able to resolve many complaints through the informal negotiations and conciliations it facilitates. However, if informal negotiations don’t work, AFCA can go through a more formal process to arrive at a decision, known as a “Determination.” This process includes providing a preliminary written assessment about the merits of a complaint.
“If we make a Determination that is in the complainant’s favour and they accept it, the financial firm is required to comply with the Determination and any remedy that we award. For superannuation complaints, any Determination that we make is binding on both parties,” Locke said. “Whenever possible, there is one case handler and an ombudsman or adjudicator who deals with each complaint.”
According to Locke, their investigation process involves assessing disputes and considering all the relevant information each party gives. Information is then exchanged to make sure each party can respond to the other’s material, leaving no room for surprises.
“We encourage cooperation and collaboration by the parties in the resolution of complaints. Financial firms and complainants are able to engage proactively with AFCA, and financial firms receive automated email communications when a complaint is first registered and are given an opportunity to resolve the complaint directly with the complainant in the first instance,” Lock said.
Rebuilding trust
AFCA finds that there is a need to rebuild trust between consumers and financial services, and one essential step in accomplishing this goal is to get dispute resolutions right. Locke sees AFCA as an external dispute resolution service that proactively works with financial services to resolve individual disputes when they occur; improve internal practices and reduce the risk of disputes occurring; and ensure that when concerns are raised, financial firms treat their customers fairly.
“AFCA expects financial firms to take their IDR and EDR obligations very seriously. That means having enough properly trained staff to resolve disputes quickly, objectively and fairly – IDR is not a rubber stamp for decisions made by the business,” Locke said.
According to Locke, as a new organisation with staff across Sydney and Melbourne, AFCA expects to receive over 55,000 complaints in its first year of operation.
