AFCA’s Six month report: key issues

AFCA has released its Six month reportMore interesting than the raw number of 35,263 complaints received are the type of complaints and AFCA’s approach to resolving them.

Systemic issues
With respect to its obligation to report systemic issues and contraventions of the law to ASIC, AFCA identified 16 potential serious contraventions and other breaches. At the end of April it also had 85 definite systemic issue investigations open.

Common issues AFCA is currently investigating include:

  • Misleading conduct;
  • Conduct of employee/authorised representatives;
  • Adequacy of claims handling process;
  • Processing errors.

Method of resolution of complaints
87.7% of AFCA members had no complaints lodged against them in the first six months.

Of the members who had complaints:

    • 64 per cent were resolved by the financial firm;
    • 10 per cent were resolved after negotiations or conciliation;
    • 3 per cent were resolved after a preliminary view or determination;
    • Of those that were resolved after a preliminary view, 70 per cent were in favour of the financial firm;
    • Over 72 per cent of the determinations issued were in favour of the financial firm.

Members pay a complaint fee which increases with each stage of the process.

Fairness project
AFCA is undertaking a ‘fairness project’ to map community expectations and produce a set of criteria for fairness which can be plainly understood and will explain how AFCA assesses fairness in any given complaint.

AFCA says this approach will ensure it delivers clear, consistent and quality decision making and will set the bar for financial firms when applying fairness to their own internal dispute resolution processes.

Analysis of complaints
Banking and finance complaints: 61 per cent of total received by AFCA. 67 per cent of complaints received related to the four largest banks. In the future AFCA will classify ‘Mutual Banks’ as a category separate from ‘Banks’, ‘Credit providers’ and ‘Superannuation’.

Top five banking and finance issues

  • Credit reporting;
  • Unauthorised transactions;
  • Responsible lending;
  • Misleading product/service information;
  • Incorrect fees/ costs.

AFCA made particular note that the high number of unauthorised transaction complaints shows that financial firms need to do more to ensure that they have appropriate systems in place to detect fraudulent transactions, including in relation to financial elder abuse.

Investments and advice complaints:  5 percent of total of complaints received.

Top 5 investments and advice issues

  • Failure to follow instructions/agreement;
  • Inappropriate advice;
  • Failure to act in client’s best interests;
  • Incorrect fees/costs;
  • Service quality.

Superannuation complaints: 9 per cent of total complaints.

Top five superannuation issues

  • Incorrect fees/costs;
  • Delay in claim handling;
  • Account administration error;
  • Death benefit distribution;
  • Denial of claim.

Life insurance: 2 per cent of total complaints received.

Top five life insurance issues

  • Denial of claim;
  • Incorrect premiums;
  • Delay in claim handling;
  • Claim amount;
  • Cancellation of policy.

General insurance: 23 per cent of all complaints.

Top five general insurance issues

  • Delay in claim handling;
  • Claim amount;
  • Denial of claim – exclusion/ condition;
  • Denial of claim;
  • Service quality.
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