Less complaints about bad advice, but more on product interpretation: AFCA

Complaints regarding inappropriate advice and failing to act in a client’s best interest have reduced but complaints about interpretation of product terms and conditions have increased sixfold, according to data from AFCA.

The authority revealed inappropriate advice claims complaints halved in FY22 from 534 in FY21 to 241, followed by failure to act in client’s best interests (dropped from 525 to 281), and service quality (674 to 570).

However, interpretation of product terms and conditions jumped from 100 complaints in FY21 to 654 in FY22. Failure to follow instructions/agreements saw a modest increase from 229 to 332.

Overall, there was 72,358 complaints lodged to AFCA during FY22, a 3 per cent rise to the previous financial year.

AFCA aims to present more data at its annual member forum next week.

At last year’s member forum the authority revealed only 1,238 of the 70,510 total complaints received during FY21 came from the advice sector, while most arise around insurance.

At the time, AFCA stated advice complaints continued to trend down at the start of FY22.

“I’m pleased to say that looking at this early stage at about a 33 per cent reduction,” AFCA lead ombudsman for investments and advice Natalie Cameron last November.

Advice not the focus

One of the biggest increases in complaints was generated by natural disasters like floods, with 1,586 complaints being made, more than double the 653 complaints from similar disasters the previous year.

Among the largest financial firms, the big four banks together accounted for nearly 20,000 complaints, a 10 per cent rise.

The top four insurers together accounted for about 9,400 complaints, up 19 per cent.

Overall, the number of licensed financial firms with a complaint lodged against them was 5 per cent lower than in the previous 12 months.

AFCA chief ombudsman David Locke said there was a lower level of hardship complaints in FY22 which reflected the work the banking sector has done to support consumers in recent years.

“That’s really positive. However, we’ll be working with industry and consumer groups as we monitor the impact of cost-of-living pressures and higher interest rates on financial services consumers in the coming year.”