Rising Complaints in Australian Financial Sector: Credit Cards and Online Accounts Most Affected
Introduction:
The Australian Financial Complaints Authority (AFCA) has reported a significant increase in financial complaints in 2023, with credit card and online account-related issues leading the way. While home loan complaints saw a slight decline, the overall trend is concerning for industry experts.
Complaints Breakdown:
According to AFCA, the total number of financial complaints reached over 105,000 in 2023, a 9 percent increase compared to the previous year. This follows a substantial 34 percent rise in complaints in the previous year. Among the various categories, online account complaints experienced the highest surge, rising by 33 percent to reach 2,533. Personal transaction account complaints also saw a significant increase, soaring by 19 percent to 13,635. Personal loan complaints grew by 17 percent, reaching 7,660. However, the most alarming statistic is the 12 percent jump in credit card complaints, which reached a total of 11,841. In contrast, complaints related to home loans declined by 3 percent, amounting to 6,913.
Insights from AFCA CEO:
AFCA CEO and Chief Ombudsman, David Locke, expressed disappointment at the lack of progress in reducing complaints. He believes that financial firms should be more proactive in resolving complaints internally or preventing them altogether. Locke emphasized the importance of addressing rising complaints at their source to ensure a healthier financial system for everyone involved.
Digital Fraud Rates:
In a separate report by TransUnion, it was revealed that the global suspected digital fraud rate in financial services increased by 3 percent to 4.3 percent compared to the previous year. This rise in digital fraud is a concerning trend that aligns with the increase in online account complaints reported by AFCA.
Superannuation Sector Scams:
AFCA also noted instances of sophisticated scam activities in the superannuation sector. The organization urged super fund trustees to review their existing measures to protect members from fraud. Locke stressed the importance of taking proactive steps to prevent issues seen elsewhere and maintain the relatively low level of scam and unauthorized transaction complaints in the superannuation sector.
Government Reforms and Identity Protection:
To combat fraud in the country, the Albanese government introduced identity protection reforms that successfully blocked 300,000 fraud attempts. These reforms were implemented following the Optus data breach in 2022. Attorney-General Mark Dreyfus MP highlighted that these reforms, along with other critical initiatives like Digital ID and the Australian Cyber Security Strategy, aim to strengthen the country’s resilience against fraud and support responsible AI usage.
The Role of Lenders:
AFCA believes that lenders have a crucial role to play in addressing fraud attempts and maintaining trust in Australia’s financial system. The organization urges lenders to respond promptly when customers face financial difficulties, providing tailored support to individuals. By taking proactive measures, lenders can prevent salvageable situations from escalating into dire circumstances that result in complaints.
Conclusion:
The rise in financial complaints, particularly related to credit cards and online accounts, is a concerning trend for the Australian financial sector. The increase in digital fraud rates further highlights the need for stronger measures to protect consumers. While government reforms and identity protection initiatives are steps in the right direction, lenders must also take responsibility for addressing fraud attempts and providing necessary support to customers in financial distress. By tackling rising complaints at their source, the industry can work towards a more secure and trustworthy financial system for all.
