The double whammy of rising living costs and interest rate hikes has caused more Australians to file complaints against financial institutions in the 2022-2023 financial year.
This figure represented a 23 percent increase compared to the previous year.
Concerns About the Surge in Complaints
AFCA chief ombudsman and executive David Locke said the sharp rise in the number of complaints received posed a challenge for his organisation.“Scam-related complaints to AFCA have nearly doubled between 2022 and 2023. They continue to be of great concern to us.
“We are also seeing the impact of increased interest rates and cost of living pressures, with complaints involving financial hardship also significantly higher.”
Among the top issues complained about in 2023, denials of claims saw the largest rise at 50 percent, followed by unauthorised transactions at 48 percent, claim amount at 24 percent, and delay in claim handling at 20 percent.
Personal transaction accounts (16,028 complaints), credit cards (12,124 complaints), comprehensive vehicle insurance (9,565 complaints), home building insurance (8,073 complaints), and home loans (7,461 complaints) were the top five sources of dissatisfaction among Australian consumers and small businesses.
While the AFCA managed to recover over $304 million (US$204 million) in compensation and refunds, up 38 percent from 2021-2022, Mr. Locke highlighted the need for financial firms to improve customer satisfaction and the ability to settle disputes in-house.
“We believe many financial firms could be doing a better job of handling complaints within their own internal complaints processes, so only the most complex cases reach AFCA—which is the role we are meant to play,” he said.
Nearly Half Australians Experience Financial Hardship
The AFCA’s data comes after a recent report (pdf) by the National Australia Bank revealed that 44 percent of Australians currently had some form of financial hardship in the third quarter of 2023, up from 43 percent from the previous three months and 36 percent from one year ago.Among the people experiencing hardship, one in four said they did not have enough money for an emergency, while one in five could not cover expenses for food and basic necessities or pay a bill.
In addition, nearly one in ten (7 percent) reported being unable to pay their approaching mortgage.
Australians aged between 18 and 29 were the hardest hit (55 percent), followed by the 30-49 group (54 percent, the 50-64 group (39 percent), and the over 65 group (22 percent).
While fewer people in lower income brackets reported financial hardship in the third quarter of 2023, there was a significant increase among higher income groups.
“In the $35-50,000 and $50-75,000 income groups, the number of that experienced hardship also inched down in both groups to 41 percent,” the report said.
“It was, however, unchanged in the $75-100,000 income group (45 percent) but jumped sharply in the higher income group to 41 percent.”
Meanwhile, the household savings rate dropped to 3.2 percent in the June quarter of 2023, the lowest level since mid‑2008.
