More than 7500 people, affected by the natural disasters are among the more than 400,000 disputes handled by the Australian Financial Complaints Authority (AFCA) in it’s first five years of operation.
The financial dispute resolution scheme recently reached the major milestone, securing a total of $1.2 billion in compensation and refunds.
This was during some of the most trying times financial firms and their customers have faced, including the financial impact of significant natural disasters, a global pandemic, rising interest rates and a sharp escalation in scams activity.
Since starting operations in November 2018, AFCA has worked with more than 7500 people affected by natural disasters, more than 16,500 victims of scams, and more than 30,000 people experiencing financial difficulty.
It registered more than 17,000 COVID-related complaints, helping to resolve disputes involving financial products such as travel insurance and superannuation.
In addition, AFCA’s systemic issues work – where it identifies wider issues than a single complaint – resulted in 4.9 million people receiving more than $340 million.
“We have dealt with hundreds of thousands of cases over the past five years, but we are fully aware that behind every complaint is an individual, a family or small business,” AFCA’s Chief Executive Officer and Chief Ombudsman, David Locke, said.
“We know how stressful a financial dispute can be, and how critical it is to help consumers and firms resolve their differences.
“An ombudsman service also plays an important role in supporting public confidence in engaging with the financial services sector, because we are here to help when consumers and firms can’t resolve disputes on their own.
“We work to contribute to a fair and efficient financial services sector.”
With complaints reaching a record 97,000 in the last financial year alone, AFCA’s services had never been needed more, Mr Locke added.
“But our hope is that, working with firms, we will see a significant improvement in their in-house complaints handling. Consumers shouldn’t have to be escalating this volume of disputes to AFCA.”
He congratulated the 70 per cent of AFCA Scheme member firms that have never had a complaint reach AFCA.
“While we will always point out areas of concern, to help inform consumers, firms, regulators and government, it’s important for the community to understand that the majority of financial firm members do not generate any complaints,” Mr Locke said.
Mr Locke said AFCA continued to be a cheaper and more efficient alternative to a court process for both firms and consumers.
Over its first five years AFCA resolved 60 per cent of cases in less than 60 days – mostly by helping the two sides reach agreement.
Only 6 per cent of cases needed to progress to a formal decision.
AFCA was set up after the 2017 Ramsay Review recommended the establishment of a single scheme to handle disputes formerly handled by the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
AFCA is a not-for-profit organisation funded by fees and charges paid by member firms.
Its service is free for consumers and small business complainants.
A Treasury-led Independent Review in 2021 found AFCA was “performing well in a difficult operating environment and a changing regulatory landscape” and reaffirmed its impartiality and its fairness jurisdiction.
