Financial difficulty complaints rose 25% in 2023
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The news: The Australian Financial Complaints Authority (AFCA) said it is concerned by a 25% rise in complaints involving financial difficulty, especially lenders’ handling of customer requests for hardship assistance.
The numbers: Complaints involving financial difficulty, a category that includes disputes over hardship assistance, rose 25% in 2023. The new figures published by the financial sector ombudsman found that of the 5,396 complaints, a third related to home loans.
More than half of financial difficulty complaints to AFCA during the year were about a lender's failure to respond to a request for hardship assistance, with figures particularly high for smaller lenders and buy now pay later providers.
The context: AFCA said that given the "challenging economic environment", it was not surprised by the increase in consumers seeking hardship assistance. While acknowledging the investments some lenders have made in specialist hardship teams and processes, the authority said "the rise in complaints tells us there is still work to do".
AFCA also saw complaints where lenders had provided a standardised, or “cookie cutter” response that did not consider the customer’s individual circumstances. Under the National Credit Code and the Banking Code of Practice, banks are required to work with customers to find a sustainable solution to financial hardship, and to do that by considering their individual circumstances.
The financial complaints authority said it noted other issues including lenders issuing default notices to consumers who had agreed to repayment arrangements, lenders placing unnecessary barriers to financial counsellors assisting consumers, and debt recovery action being taken while a matter was still before AFCA, which was not permitted.
The Australian Securities and Investments Commission has been undertaking a review of hardship applications and wrote to lenders last year calling on them to make sure they supported customers appropriately.
What they said: AFCA's chief ombudsman and CEO David Locke said: “We are concerned about the increase in complaints about financial hardship and about the practices of some lenders. We urge all lenders to identify hardship early and to ensure they provide genuine consideration to a customer's request for hardship assistance.”
The source: AFCA media release
