AFCA awards $185 million in compensation to consumers in its first 12 months

It has been 12 months since the Australian Financial Complaints Authority (AFCA) opened its doors as the nation’s one-stop-shop for complaints about financial firms, replacing three former external dispute resolution schemes.

AFCA Chief Executive Officer and Chief Ombudsman David Locke said AFCA was a fair, free and independent service that was fast becoming valued by the public and its members for its approach to dispute resolution.

“Every day we continue to hear from people who are dissatisfied with the way their financial firm has handled their complaint. These matters have not been resolved internally by financial firms and so the individual then brings their complaint to AFCA,” Locke said.

“We take our commitment to fairness and independence very seriously, and where possible we encourage the financial firm and complainant to resolve the matter among themselves. The statistics show that this happened with 70 percent of all claims resolved in the past 12 months.

“Still, the increase in complaint numbers we are witnessing at AFCA indicates that there is still work to be done by firms to improve their practices and restore public faith in financial firms. AFCA will continue to focus on member engagement to help firms to enhance their own internal dispute resolution procedures.”

On day two of the NIBA Convention on the Gold Coast in October 2019 Locke addressed insurance brokers directly and had said, “you don’t keep me awake at night.” At the time AFCA had received 66,739 complaints, 325 of which were with regards to brokers.

A year of AFCA in a snapshot:

  • Banks the most complained about financial institution followed by General Insurers
  • Credit complaints, insurance claims and financial hardship the biggest issues
  • Forty per cent increase in complaints to AFCA compared to predecessors – 73,272 vs 52,232
  • Complainants awarded $185 million in compensation
  • Seventy-seven per cent of all complaints resolved, with the majority of those resolved in 60 days or less
  • Australians making 200 complaints a day on average
  • Seventy per cent of complaints resolved in favour of the complainant
  • Eleven per cent of complaints made by people experiencing financial difficulty
  • Australians in dispute with their bank, insurance provider, super fund, or other financial firms have lodged 73,000 complaints with the financial sector’s new ombudsman and have been awarded $185 million in compensation, in the first 12 months of its operation.