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AFCA complaints continue to soar, ombudsman tells FINSIA webinar

by Lewis Panther | 26 Jun 2019
Complaints handled by AFCA are increasing at such a rate the ombudsman will have to increase manpower by almost 300 per cent in its first year.

The newly-formed Australian Financial Complaints Authority is receiving more than 650 enquiries a day - with more than 250 complaints lodged on a daily basis.

And the number of complaints is continuing to rise, Chief Ombudsman and CEO David Locke told FINSIA members during our latest webinar.

His organisation’s workload is expected to rise even further as legacy complaints that were disallowed by AFCA’s predecessor will be considered for review.

Locke anticipates his staff will grow from 350 to more than 900 by the end of the year.

That’s partly because from July, individuals and small businesses will be able to lodge legacy complaints dating back to 2008.

He said: “We have been rather busy. We have 41,500 complaints brought to us. 

“We’ve seen an increase since the Royal Commission.

“We have got 40% more cases than we were anticipating. It is challenging because of the volumes coming through.

“Every day over 650 people are calling AFCA and everyday we are getting over 250 complaints lodged everyday. And that’s increasing from what it was a few months ago.

“Starting in two weeks time we are accepting legacy claims.

“We have been looking at how many people that may affect and it stands at 14,000.

“That is a change that is coming.”
While the numbers may look alarming, most of the issues are resolved quickly, he explained. 

Around 40% of the 500 conciliation's carried out a month are resolved. 

He said: "It's not always about money. Sometimes people are just looking for an apology.

“We are really focused on fairness."

As well as dealing with issues similar to those seen at the Royal Commission, Locke explained that dealing with insurance was a big part of the workload.

He said AFCA had “done quite a lot of work up in Townsville since the floods” and everything else from pet and travel insurance to traffic insurance.

And although AFCA can make awards of $500,000 against its 37,000 members on complaints involving sums up to $1m - and $2m on complaints involving sums up to $5m - Locke was keen to point out his role in giving advice to assist businesses avoid having complaints made against them in the first place.

Of the number of complaints and the process to resolve them, Locke added: “Our focus is not just about resolving disputes but working with financial firms.

“I don’t see the number of complaints coming to us as a success. I see it as a failure. 

“There are grounds for improvement. Some of the matters that are coming to us shouldn’t be dealt with at the first point of contact.

"If we get a complaint that comes in then our first approach is to send it back to the firm involved. This may cause some consternation with the complainant who think they’re going round the houses.

“But we want to do is give firms every opportunity to resolve the matter. And we find it usually does.

“We find that 38% of cases are resolved at that stage.”

At this stage, AFCA checks it has jurisdiction and also if the claims is “vexatious or frivolous” and has been finding that 10 per cent of claims get thrown out at this stage.

It will then go through to a case officer, who will look at what the parties are saying.

It then typically goes to conciliation, which is happening at a rate of 500 a month.

Forty per cent of matters resolve at conciliation, Locke said. Or quickly afterwards.

But he did concede AFCA had received 83 where there was evidence of systemic issues which had to be reported through to ASIC, the ATO and APRA.

The fact that firms and individuals involved would be named he believed will foster an attitude that would see better practices leading to fewer complaints.

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