Complaints involving financial difficulty have dropped by nearly 40%, according to the Australian Financial Complaints Authority’s (AFCA) latest data.
The report showed that Australians in dispute with insurers, banks, super funds, investment firms, and financial advisers lodged 70,510 complaints to AFCA from July 01, 2020 to June 30, 2021. As a result, they secured over $240 million in compensation and refunds, thanks to AFCA’s help. They also received fee waivers, debt forgiveness, and apologies.
From 2020 to 2021, AFCA received 8,303 COVID-19-related complaints, up from 5,013 in the final four months of the 2019-2020 period after the pandemic was officially declared. This meant an average of 692 a month in 2020 to 2021, down from an average of 1,253 complaints a month from March to June 2020.
Overall, complaints were down 12% from 2019-2020, which is unsurprising considering the uncertainty at the start of the COVID-19 pandemic, and the spike in complaints in affected sectors such as travel insurance.
Travel insurance complaints dropped by 22% in the 2020 to 2021 period as Australians stayed at home. In comparison, superannuation complaints dropped by 31% after a jump in the previous year when the government allowed the early release of super at the start of the pandemic.
AFCA’s latest data also included 165 complaints related to insurance cover for business interruption (BI) associated with COVID-19, which are expected to increase once the second of the two BI test cases brought by the insurance industry is resolved.
AFCA Chief Ombudsman David Locke explained that government support, business relief measures, and a recovering economy helped decrease the number of complaints from 2020 to 2021 despite the pandemic.
“Significantly, complaints involving financial difficulty were down nearly 40% from the numbers we saw the previous year,” Locke said. “That’s a great outcome and reflects the positive response from government and industry to the impact of COVID.”
However, Locke stated that complaints about funeral insurance sales in Indigenous communities continued to be troubling from 2020 to 2021. One provider accounted for 98% of funeral insurance-related complaints and was the subject of multiple determinations in favour of complainants.
Locke predicts that it might take a few more months before AFCA can determine the full impact of the end of government emergency support and assistance from financial firms such as deferred loan repayments.
“It’s important that consumers and financial service providers continue to work together to resolve issues quickly as they emerge,” Locke added. “The past 12 months show what’s possible when that happens.”
