AFCA approves $240m in refunds and penalties: Could you be due compensation?
New data reveals AFCA received a whopping 70,000 complaints in the last year generating millions of dollars worth of refunds to Aussies.
The Australian Financial Complaints Authority (AFCA), a non-government ombudsman, received a whopping 70,000 complaints over the 2021 financial year.
In addition to securing more than $240 million in compensation and refunds, AFCA achieved outcomes such as fee waivers, debt forgiveness and apologies.
Over the last 12 months, the most complained about products were:
Unauthorised transactions on credit cards were one of the biggest complaints – and there were some repeat offenders identified. For instance, one funeral insurance provider was responsible for 98% of complaints related to funeral insurance, and was the subject of multiple determinations in favour of complainants, said AFCA's Chief Ombudsman, David Locke.
"Scams, which have accelerated during the pandemic, are leading to growing complaints about transactions," Locke said.
If you've been the victim of a scam or you believe your bank, insurer, financial planner, mortgage broker or super fund hasn't acted in your best interests, you have the right to lodge a complaint with AFCA.
How to make a complaint if you feel you've been wronged
Both individual consumers and small businesses can access the free ombudsman service to make a complaint.
Before you complain to AFCA, it obviously encourages you to try and resolve the problem directly first, using its internal dispute resolution process.
But if your complaints or attempts to resolve the issues are getting you nowhere, you can contact AFCA and:
- Find your financial firm.
- Identify the issue you want to complain about.
- Work out what type of loss you have experienced.
- Consider the outcome you want to achieve, for example, a refund? Financial compensation?
- Gather together any relevant documents to help support your complaint.
Jump over to AFCA to learn more about the process it follows when you lodge a complaint, and to find out where you can go for help if your complaint doesn't fall within its rules.
Top 5 tips for those who are struggling with money
If your situation involves less of a complaint about an institution, and more of an issue to do with your own financial situation, there is support and options available.
Interestingly, the number of complaints involving financial difficulty were down sharply on 2019/20, with a fall of nearly 40% from the previous year.
"That's a great outcome and reflects the positive response from government and industry to the impact of COVID," Locke said.
"However, it's too early to say we're out of the woods yet. It may be some months before we know the full impact of the end of government emergency support and assistance from financial firms such as deferred loan repayments. And, of course, we are still living with COVID-19."
He added, "It's important that consumers and financial service providers continue to work together to resolve issues quickly as they emerge."
If you're struggling with your finances, there are a few things you can do to get back on track:
- Consolidate personal debts into one loan. Look for a low-interest rate loan or even a 0% credit card offer, so you work to pay off all your dangling debts. Make sure you pay off and cancel your credit cards, so you don't get into new debt again.
- Don't use "buy now pay later" if you're in financial strife. It's just kicking the can down the road in terms of your financial trouble, and you'll end up paying more in interest and fees in the long run. It's short-term gain for long-term pain; look for more effective ways to get on top of your money issues.
- Refinance to a cheaper home loan. There are loads of home loan deals with ultra-low interest rates, including some mortgages that include cashback offers. You can use the cashback and the interest rate savings to build your savings account.
- Reach out to your bank or lender for support. Most banks have renewed their offers of support to those impacted by recent lockdowns, including things like temporary repayment holidays.
- Ask for help. If you're worried about your debt levels, you don't need to struggle alone. Services like the National Debt Helpline offer free financial advice.