Paid representatives lodged three times as many home loan complaints with AFCA this year, even though their total caseload fell by more than a third
Paid representatives lodged three times as many home loan complaints with AFCA in 2025-26, even though their total caseload fell by more than a third
Firms that charge consumers to run complaints against their lenders lodged 410 home loan disputes with the Australian Financial Complaints Authority (AFCA) in the 2025-26 financial year. A year earlier they lodged 136. The 201% rise is set out in AFCA’s Annual Review 2025-26, released this month.
And the surge in mortgage-related work may climb even higher as other parts of their business dry up. Complaints lodged by paid representatives fell 38% overall, from 9,429 to 5,878, after a surge of consumer credit insurance claims in 2024-25 eased. Yet their credit card complaints rose 140% and personal loan complaints 70%.
AFCA said the figures reflect paid representatives shifting into other areas of financial services. Home loans are one of them, and that puts the brokers who arranged those loans closer to the line of fire.
The review’s headline figures, including a record 119,949 complaints and a 21% rise in home loan disputes, were reported by MPA last week.
Credit reports in the crosshairs
Much of the growth sits in credit reporting. Complaints from paid representatives about credit enquiries rose from 97 to 493. Repayment history complaints went from 151 to 449, and default listing complaints from 275 to 450.
The rise comes as AFCA takes a closer look at requests to correct credit information. The review says that where circumstances outside a borrower’s control stopped them making repayments or seeking help, AFCA may require repayment history to be amended, a default removed or a hardship arrangement backdated. For a borrower trying to refinance, those changes can be worth a lot, which gives a fee-charging firm something to sell.
Complaints about lenders ignoring hardship requests also climbed. Paid representatives lodged 218 of them, up from 110.
AFCA defines a paid representative as a person or organisation paid by a consumer to help with or lodge a complaint. Since July 2021, debt management and credit repair firms acting on consumer credit contracts have been required to hold an Australian credit licence and be AFCA members.
From insurance to credit
Paid representatives have moved in on a product before. Their consumer credit insurance complaints grew from 704 in 2021-22 to 7,188 in 2024-25, then fell back to 2,468 in 2025-26. Complaints lodged about misleading product information followed a similar path, peaking at 6,981 before dropping to 2,626.
As insurance volumes have fallen, credit complaints have picked up, including those about home loans.
Regulators have long been uneasy about parts of the sector. The Australian Securities and Investments Commission (ASIC) has noted concerns from lenders, AFCA and consumer groups that some debt management firms provide unsuitable services or act in predatory ways. ASIC’s guidance on paid representatives allows a lender to stop dealing with a representative it reasonably believes is not acting in the customer’s interests, as long as it tells the customer why it is now contacting them directly.
AFCA expects paid representatives to meet a higher standard than unpaid advocates. It said it spent 2025-26 working on the quality of their submissions, the transparency of their fees and their professional conduct, and would keep watching as their work spreads to new products.
Where litigation funders fit
Paid representatives and litigation funders work in different ways. A paid representative charges the consumer a fee, either upfront or as a share of any payout, to take an individual complaint to AFCA, which consumers can use for free. A litigation funder pays the costs of a class action in court in exchange for a cut of any settlement or judgment. The AFCA review does not suggest funders are behind the rise in home loan complaints.
Funders have, however, already put money into a case involving mortgage brokers. UK-based Woodsford is helping fund a Shine Lawyers class action against Lendi Group, the parent of Aussie Home Loans, and insurer ALI Group. The case covers customers who took out a Mortgage Protection Plan or My Protection Plan through an Aussie broker between February 2018 and February 2024. It alleges the policies were of little value and that the brokers who recommended them breached their best interests duty.
Lendi and ALI are defending what the latter has slammed as “baseless” claims. The Federal Court rejected their attempt to have the case stripped of its class action status in 2025, and a trial started in the Federal Court in Victoria on 8 July 2026. It remains ongoing at the time of writing.
The case raises questions for the wider industry. One is whether a broker’s recommendation of add-on insurance, made after a detailed fact-find, counts as personal financial advice. Another is whether best interests duty claims against brokers can be run as a group. A ruling for the borrowers would show other funders how such a case can be built.
What it means for brokers – keep good notes
Good records remain a broker’s strongest answer to a complaint. Paid representatives and class action lawyers look for gaps in what was written down at the time. Notes on a client’s needs and objectives, the purpose of the loan, why a product was chosen and what was said about any add-on cover all help. In a case set out in this year’s review, AFCA looked past the paperwork on a broker-arranged business loan and judged it on what the money was actually used for.
Hardship is another area to watch. A broker who helps a struggling client contact their lender’s hardship team early, and records that they did, leaves less room for a later complaint that the lender never responded.
Clients may also not know that AFCA is free. They can lodge a complaint themselves online or by phone without paying a third party a share of any refund.
For most broker businesses, a single complaint costs little. AFCA members pay nothing for their first five complaints closed in a financial year, and the annual AFCA fee for an Authorised Credit Representative is $73.01 in 2026-27. Repeated complaints from a paid firm, or a place in a funded class action, would cost far more in time, fees and reputation.
With complaint numbers at a record, a leading industry figure has already been urging brokers to stay on top of compliance.
Leo Gagic, chief executive of the Finance Brokers Association of Australia (FBAA), said the increase across banking, insurance, superannuation and investments reinforced why compliance and due diligence matter, as is “putting clients at the centre of every recommendation”.
“As AFCA itself notes, many complaints stem from communication, service quality and process-related issues. This serves as a reminder that getting the fundamentals right continues to be one of the most effective forms of complaint mitigation,” Gagic said.
The shift by paid representatives into home loans gives that advice more weight.
