The Australian Financial Complaints Authority (AFCA) is urging insurance brokers and financial advisers to notify consumers with concerns about older add-on insurance policies to act before a key deadline.
Complaints related to these policies – specifically those sold prior to July 2019 – must be lodged by June 30.
Add-on insurance, including consumer credit insurance (CCI), was commonly bundled with financial products such as vehicle and personal loans, home mortgages, and credit cards. These policies were the subject of long-standing regulatory scrutiny, with criticisms focused on suitability, sales practices, and product design.
Emma Curtis, AFCA’s lead ombudsman for Insurance, said individuals who suspect they were mis-sold these products should lodge a complaint before the deadline expires.
“AFCA is very familiar with add-on insurance and the issues that arose in sales of this product,” she said. “AFCA is designed to be a free and simple alternative to a court or tribunal process, without people needing to pay for representation. If you have a complaint, please make sure you lodge by the deadline.”
Issues with the design and sale of CCI and similar products were first identified by the Australian Securities and Investments Commission (ASIC) more than a decade ago.
The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry later investigated similar concerns, leading to widespread remediation efforts and the withdrawal of many of these products from the market.
Complaints regarding policies issued after July 2019 are not affected by the June 30 deadline, although standard complaint timeframes still apply.
In the 2023-24 financial year, AFCA received over 105,000 complaints – more than twice the volume managed by its predecessor schemes combined in their final year.
An external assessment of randomly selected case files found the majority met or exceeded expected standards for fairness and quality.
AFCA also reported an increase in small business-related disputes, with 4,466 complaints lodged during 2023-24, a 17% rise from the previous year.
Suanne Russell, AFCA’s Lead Ombudsman for Small Business, linked the growth to ongoing financial pressures such as high borrowing costs, reduced liquidity, and elevated operating expenses.
The ombudsman also noted a sharp uptick in scam-related complaints, which rose nearly 50% year-on-year. A key concern involved email compromise scams that altered payment instructions for large transactions, particularly in property and high-value asset transfers.
According to Russell, small businesses are particularly susceptible to such scams due to limited resources for cyber risk management.
“Scams are a growing threat to small businesses and can have a significant impact on business owners. We believe financial service providers should enhance protections for their small business customers to help prevent these damaging losses,” she said.
AFCA welcomed the federal government’s new Scams Prevention Framework, describing it as a step toward reducing fraud-related losses across the commercial sector.
