AFCA reports record number of financial complaints
AFCA reports record number of financial complaints | Insurance Business Australia
Insurance News
AFCA reports record number of financial complaints
Top issue among complaints revealed
Insurance News
By
Roxanne Libatique
The Australian Financial Complaints Authority (AFCA) has received a record number of 96,987 complaints in the past year from consumers in dispute with financial companies, a 34% increase from the previous year.
The top issue in complaints lodged in 2022 to 2023 was delay in insurance claims handling (up 76%), with general insurance complaints having risen by 50% to 27,924.
“We have been raising our concerns about claim delays with insurers for over 12 months now,” said David Locke, chief ombudsman and CEO of AFCA. “It is disappointing that this continues to be a concern. While we acknowledge the challenges insurers have faced, the bulk of complaints in the past year were not about natural disasters but about regular claims.
“We would like to see insurers take the necessary steps to ensure fewer policyholders have to take a complaint to AFCA.”
Delay in insurance claims handling was also one of the top issues in superannuation. Superannuation complaints rose by 32% overall during the same period, with a concerning 136% increase in complaints related to insurance claim delays, including paying death benefits.
“We urge fund trustees to closely track the progress of claims and to review outcomes for members. Access to this money is vital for people who have lost a loved one or are unable to work. Unnecessary delays and poor communication are distressing,” Locke said.
Factors that led to rise in complaints
AFCA revealed that the rising interest rates and cost of living have worsened consumers’ financial stress, which was reflected in the complaints lodged in the final quarter of 2022 to 2023. The rising number of scams and insurance claims handling issues have also contributed to the significant rise in complaints.
“We are deeply concerned by the volume of complaints consumers are having to escalate to AFCA,” Locke said. “It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.”
Overall, consumers secured $253.8 million in compensation and refunds in the year. Moreover, AFCA’s work on issues with a wider impact than single complaints resulted in firms remediating over 368,000 people to a total of $75.5 million.
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