This podcast is brought to you by Australia's LGBTQIA plus community media organization. Joy, keep joy on air by becoming a member, a subscriber or donate head to joy.org.au Joy, a diverse sound for a diverse community.
You are on Saturday magazine, Joy 94.9, Macca and Fiona and Paul. It's our great pleasure to welcome the CEO of the Australian Financial Complaints Authority, David Locken. It's great to have you back again, David and I love stats. And I'm just looking at some of the stats and I talked about this in the intro at the start of the show. So 104,000 complaints received last financial year. It's 2000 a week, 400 a day.
That's a lot. You resolved almost all of those. But the figure that really hit me was the amount in compensation that was awarded to consumers through the Australian Financial Compliance Authority dispute resolution process. $313 million. That's correct. And that's just in 12 months. In 12 months. Like that is, that shows us the value
of what Africa does, but it shows the issues that people are having in their finances or in the financial world. About 55% were about banking and finance, probably 25 general insurance
investments and advice relatively small, life insurance small, superannuation about 5%. I wanted to ask David Apra, the Australian Prudential Regulatory Authority. They've made some comments and had some reports about superannuation funds and the payment of death benefits. Is there a bit of a crossover between what AFCA does and what APRA does in superannuation?
Well, APRA is the prudential regulator, so their role is to ensure that the superannuation system, the banking system and the insurance system is sound, that there aren't going to be banks collapsing or the superannuation funds failing. The regulator that really looks at how they're conducting themselves and whether they're doing the right thing and complying with the law is ASIC, the Australian Securities and Investments Commission.
So their role as regulator is to really look at how the trustee funds are behaving, how they're treating consumers. Our role is to deal with the individual issues that people may have. So if you are somebody in that situation, David, and you've lost a loved one and you're trying to sort out that and you can't, then that's when you come to us. But we also
If we see that there are issues that are systemic or that impacting more than one person, then we report that through to ASIC. We've been doing a lot of that work, seeing what's going on, particularly with regard to death benefits and disability payments. As you say, there's a big announcement this week from ASIC that they're taking CBUS to court.
in terms of what the financial complaints authority does. So if people understand, if I have a dispute with my bank, that the bank has a dispute resolution process, which can correct me if I'm wrong, before AFCO will look at my complaint, I have to have tried to resolve it.
with the organisation first, is that correct? The bank have 30 days in order to resolve your dispute and you should go to the bank in the first instance. If you can't resolve it or you're not happy with what's being offered, then you can come through to us. We see there that nearly 60% are about banking
and finance. That's a bit troubling. Well, I think the figures are quite shocking. If you look at these statistics, we're in a situation now where 40,000 people
will have issues with their banks that they can't resolve with the bank and they're having to escalate to us. And then there's another 20,000 who are other credit providers. It could be latitude, it could be payday lenders, it could be by now, pie later. We're in a situation where every year now,
29,000 people are having to bring disputes about general insurance claims through to us because the insurers are not resolving those. That is market failure. Oh, it is. It's a sector failure. Sorry, Paul. Paul had a question for David. Yeah, so I was going to build on that. It's shocking. I mean, absolutely shocking those people are having to write to you to say help. One of the questions I wanted to ask you just a slight deviation is,
David, that's a phenomenal response rate. As a leader, how on earth do you get your teams in a place that they're able to give that phenomenal service? Well, it's a challenge and it has been a challenge this year with the increases we've seen because there's a lot of things going on. We've seen record number of scam cases coming through it. We've seen really high numbers of, as I said, insurance matters, but we're also seeing a lot of people in financial hardship.
So we've been recruiting more staff and obviously looking at how we can be as efficient as we possibly can, but it's a big challenge when you're getting big increases year on year of these sorts of assets. And more complexity too, David. I mean, I would assume that in a lot of cases, the value
of these disputes is increasing. People aren't contacting you about $28. No. Well, you've got to be pretty persistent. These are the people who have actually gone to the bank, who've got the wherewithal and effort.
and ability to be able to go to the bank and complain. These aren't the thousands or millions of people who are just putting up with it. These are the people who are persisting and then they're getting through that process and then they're escalating it to us. What we're seeing in terms of some of this conduct and some of the harm is we see the tip of the iceberg really. There's a lot else going on.
So as part of your role then to raise that with the other regulators, David, to say, how are you keeping your own houses in order? Why am I having to clean up your mess?
Well, a lot of it is, well, first and foremost, it's down to the financial firms, it's down to the banks, it's down to the insurers and super funds to sort their, sort their house out really and ensure that the service, that they're treating their customers, that, you know, well, and if there are issues, they're resolving those. And that's really what we want to do. So we, we do work in partnership with them and
share what we're seeing and share what we think is good practice, because if we can get to a situation where the issues don't arise in the first place, that's a win. If we can't get that, then at least a situation where when people do complain, they are resolved. The last thing I want these people have to come to us really. Our vision is an Australia free from financial disputes. I'm failing spectacularly on that at the moment. That surely is where we all want to get to. Do you think, David,
You know, that figure in banking, you know, 60,000 of the 104,000. That is a disgraceful amount that the banking and finance sector is generating. As you say, these are the people that are persistent, the ones that have gone through the process and haven't got satisfaction. Can I ask you?
So when someone lodges a claim, lodges a dispute with AFCA, what is the process? I know it takes the average time for you guys to close a complaint to 74 days.
But what is the process? Well, the process is we straightaway go to the financial firm. So we've got this issue. This has been raised. You've had a chance to sort it out. You haven't sorted out. Now we expect you to come to the table and resolve this. So that's the first thing we do. If that doesn't work,
then we'll open an investigation, we'll look at all the paperwork and what's being said, we'll request information, we'll often hold a conciliation meeting between the parties to try and see if we can broker a resolution and quite often we can at that stage. If not, we'll say this is what we think is fair in the circumstance.
If the parties don't accept that, then it goes through to an ombudsman who will make a binding determination. So that's how we go through. Only about 4% have to go all the way there, Maca. But as you can imagine, they tend to be the more difficult, the more complex matters. When a complaint comes to you, and I'm sort of musing here a little bit, people have tried to resolve it.
When it comes to you and you then contact the provider, would I be right in assuming that once you guys get involved, there's perhaps my words, a greater desire on their part to resolve the complaint?
the suddenly is and we get about 55% resolved. So that asked the question, well why on earth didn't you resolve it before it came to us? Yes, why is it that the banking institution or the organization values their customers so little that the customers now have to go to you and only you can get the answers that the customer can't. That seems really, I mean, thank goodness you're there, but that seems very unfair.
So many people, and we saw this last time we had you on, we saw it in the podcast downloads, we saw it in some of the messages we got, weren't aware of AFCA. So I suppose my question and the challenge is, how does AFCA make itself more visible
to people I know that when you lodge a complaint with your institution somewhere buried in the fine print is it makes reference to AFCA. But how do you make, apart from doing things like this, how do people become, how can you make people more aware of what you do?
Well, we do a lot online because often people will go and Google and it's often only when you've got an issue that you're paying attention or thinking about this sort of thing. You know, you only really need to know about Africa. If you've got an issue or you've got a family member or a loved one who's got a similar issue, really.
So we do a lot with that, you know, Google optimization. We do a lot with advertising as well. We do a lot of community outreach around the country. And we are seeing, we're seeing certainly the awareness of Africa growing, but we've only been going six years as well. So, you know, we still have a long way to go.
So David, how is Africa? Because I was curious to know how long Africa had been around for. How is Africa funded? And you mean, I imagine that you have a big staff.
We do, we've got about 1200 people now. Wow, that's so many. Which is, you know, which is just grown and grown. But that's because of the volumes that are coming through. And again, the conversations I have with, you know, with the financial firms is, you know, we're costing you money and we can keep growing and employing staff, but you've got to pay for all this.
wouldn't it be better to actually invest in complaints handling staff and resolve these issues in the first instance? So we have to be fully funded by industry. That's how we work. So the bank or superannuation fund or whoever the consumer has made the complaint about, they pay a fee
to run that company. That's right. And that's to cover the costs of running Africa. Well, they all have to be members and they have to pay fees to be members and very few choose to be members. The vast majority are required by law to be members. And so we got 47,000 members from the biggest banks and biggest insurers through to single financial advisors, mortgage brokers. So most of the financial services sector are required by law to be members of Africa.
And then they have to pay fees depending on how much the service is used. So that incentivizes firms that have very few complaints, just pay a $300 membership fee, firms that have thousands and thousands of complaints will pay millions of dollars in terms of the service. So it's not per complaint?
There's an element that's per complaint, about 50% of it is per complaint, but that's only once you reach a certain threshold. So when they reach that threshold, David, you'd think they'd go, this is actually costing us a lot of money, and we don't like the fact that we're losing.
Why wouldn't they change their practices? Well, the fees go up if the matter doesn't resolve. So again, that incentivizes firms to resolve. And that's all part of the model, really, to say, look, come to the table, sort this out, don't take a legalistic approaches to this, do what's fair, do what's right. And I think
The model is working because we are resolving, as you said, Makara, you know, 104,000 disputes last year. And that's great because most people wouldn't be able to go to court or pursue these matters. They would just be treated badly and get no justice. I don't know if it words into your mouth here, David, but as a consumer, if I look at how consumers are treated,
in this wonderful land of ours. We've already got an investigation going on into how the big supermarkets are treating their customers with pricing inquiries. We've had investigations into the airlines and how some of those slots are being handled.
And now with these numbers that you've got in your industry about how the banks, predominantly, I'm sure there are some more, but the banks are the mainstay of those, how they're treating their customers. Do you think the consumers have been left behind, perhaps, by some of the legislation?
Well, I think there's some things that definitely need to change. So of those numbers that we were talking about with the banks, nearly 11,000 people have been scammed. And that is a big problem. And I think we spoke about it last time when it was on here as well.
And there is legislation before Parliament that will have a really positive impact here. And some of the big banks have been taking some really positive steps to try and stem the losses. And we've certainly seen in the last six months a halving of the cases coming through. Now, that is good news, but we really need this legislation through. And actually, what this will do is not only require the banks to do more than they're doing, but also social media platforms.
I mean, who hasn't seen scam stuff on Facebook and all of this? I mean, and also the telcos. I mean, I got, again, I got another, I keep getting the hey dad, you know, the hey dad text. I got one, I got one only last week, which was hey dad, my phones dropped in the toilet and I've got a new SIM card and, you know, I'm a gay man with no children.
I was a little surprised. I've got a very smart labradoodle called Pancake, but I could see him on the sofa, so I knew it wasn't him. But why is this still going on? Why are the telcos not stopping this?
If we could get the social media platforms obliged to take action, then we could stem 30% of all scams immediately. And $2.7 billion in losses last year, $2.7 billion. So the numbers we're seeing are really small compared to the thousands of people out there who are scammed who don't do anything about it or feel embarrassed.
Unfortunately, we're out of time. We should have put it over a double session. Well, always come back. I think actually we're going to keep going because there are other issues that we'd like to talk about. I am surprised, David, if you've got a few more minutes.
Superannuation, we've seen some big issues there. The relatively small number of complaints you have about superannuation. What have I related to?
We see what we have complaints about, I think we had about 1500 complaints which were about death payments and delays and also about what's called total and permanent disability. So that's when you're able to basically make a claim because you're not going to be able to work again.
Other issues we get are around poor service, issues around rollover of accounts, mergers of accounts, issues around fees and charges and disputes around that, and sometimes issues around the life insurance cover that you've got within
within your superannuation and how that's being charged or how you've been classified with regard to that so quite a range of quite a range of issues there but the issue of real issues of concern have been these service issues particularly when people have lost a loved one particular particular people have had an accident at work or they can no longer work so they've been real problems real challenges and I think here that you know people
When they, when they complain and when they come through to you, this is about things that are, that are not just costing them money, but that are actually causing them mental anguish and pain. And we're only seeing the iceberg, you know, we're only seeing the tip of the iceberg that it says to me, yes, you know, there's APRA, there's AFCA, you know, there's ASIC and they all doing incredible work.
but what it says is that these organizations, the sheer volume of complaints, and in my opinion, if you multiplied that by four or five or even more, that's probably the real level, that something is rotten in the system, that these organizations are having issues in such numbers, yet they talk about the value of the customer,
you wouldn't exist, your organization wouldn't exist, if what they say they're doing they were doing. I think a lot of financial firms, they don't set out to do harm. No. And most people working in the financial services industry are not trying to rip people off. There are cowboys out there, there are scam merchants out there, there are people who are deliberately trying to get around the rules, and there are examples of really disgraceful conduct.
And so when we see that clearly we work with the regulators to get prosecutions and to get action or to get them basically work to try and ensure they don't have a license and can't operate. A lot of the issues though are around big complex organisations standardising processes or what we see with hardship is
You know, the difficulty to get to speak to somebody and then when you do speak to somebody getting very standardized approaches rather than somebody sitting down and actually even on the phone and listening to what your needs are, you know, if you're a woman fleeing family and domestic violence and you're contacting the same, we need help to be told you've got to do all these forms and produce all this paperwork and to do, you know, it's impossible.
So it's really about tailoring approaches and it's really about being able to support people when they most need it. And they most need it in hardship. They most need it if you've been scammed out of money, you're in panic.
you may have lost everything you've got. They most need it when people are in distress or relationship breakdown or they've lost a loved one. So I think the situation is to say you've got to do so much better at being able to tailor your service and listen to the real need of the customer.
And also with a lot of services, they become so overly complex that, you know, you need to read documents before you sign or before you make a decision to go with a particular financial service. But they're so complex in the many layers and the way that a lot of average people or ordinary people would not necessarily be able to absorb all the details. And so therefore they get themselves caught up in something
and then the financial service can tell, well, this is what's in the paperwork. I mean, they just make it unnecessarily complicated. Almost it seems like to trap people. I don't know if it's to trap people, but it does make it very difficult. So if you look at, for example, insurance, if you've looked at your insurance policy and gone through what's called your product disclosure statement,
You know, I've got a team of lawyers who are ombudsman who sometimes will sit around the room and not be able to work out clauses that have been drafted in these. And they are experts in insurance law with decades of experience. And what happens with insurance is very often we go online, we make a decision largely based on price. There may be some other criteria.
nobody sits down and reads 30 page of terms and conditions. Yet when you've got an issue and when you come to claim, then it's those terms and conditions. So there's a massive amount needs to be done in terms of simplification, explaining, giving consumers proper information on which we can make informed decisions and actually ensuring that you're not writing these clauses in such a way that
Ordinary people just will be misled. And that's part of the issue. And to question then, with your experience, David, there's going to be a lot of people listening thinking, oh, my gosh, I wish I knew the best way to approach the issue I have. What advice would you give for a consumer how to handle a complaint with a financial services provider?
Well, firstly, if you've got an issue and the person you're dealing with it, you know, isn't resolving it straight away, then you should be saying, I want to follow your internal dispute process because every financial firm has to do that they have to have this no matter how big or how small. And there are legal obligations, regulations that require how they process this. So don't just keep bashing away with the person on the phone who you've been
calling from it for weeks or months. Say, I want to make a formal complaint. I want to go through your complaints process. Do that. They've got 30 days. If they don't resolve it within 30 days, you can come through to us. And you can just Google us AFCA. You'll find Australia.
So I was going to say, first off, so we've got a few minutes left. How do people, once they've gone through that process, and I assume they're only interested in contacting you when they haven't had a resolution, or a resolution they're happy with.
They, what steps, it's via the website first? Yeah, via the website, or you can call us and we've got a free phone number, which is 1-800-93-1678. We've got chat online as well, if that's your thing, it isn't my thing, that's your thing. It's not too bad, but they drive me mad to these things, but you can speak to real players. Perhaps we can complain about that. I think we should complain more.
So that's what people do and then a Couple of other questions just quickly cryptocurrency. Yeah, this is I see that there are a couple of hundred complaints last year. That's that's very small cryptocurrency
is not required to be Afghan members, are they? Australia hasn't yet got regulation in place around crypto. There are proposals from the government to do that, and the opposition also had proposals to do that. I'm sure whatever happens with the election, we will get regulation of crypto platforms.
Some of the wallet holders and providers have voluntarily become members of Africa, so you can check on our website if they're a member, if you have an issue and they are a member, then we can deal with the complaints involving them. But the numbers are very low because we've only got a few volunteers. What's the best part of your job, David?
The best part of my job is helping people to resolve something that's caused them distress or concern or achieve an outcome that really changes their life and for the better and that of their loved ones as well. I saw a lady only a few weeks ago.
who'd been scammed out to $57,000. She was a single mom with two young kids. She worked as a cleaner. That was more than her annual income. She'd been saving it for about 10 years for the kid's future. And it was gone in an instant. We were able to get that back plus some compensation for how badly she'd been treated. Oh, my goodness.
When I saw her, she was in tears, she was so distressed, you know, that makes the world of difference. And she wouldn't have got that if we hadn't existed. Can I say, David, you and your 1200 staff, $313 million in positive outcomes for people, bloody magnificent. Well done. This is important. I encourage people, if you have a financial complaint,
You go through the process with the institution, if you're not satisfied, if it's not resolved to your satisfaction, reach out to AFCA, do the search, ring them, lodge it because it is there for a reason. So I want to thank you for coming in on a Saturday. We extended the time and I appreciate you staying for that. This is a really important
service that's provided to all of us, make use of it, because 313 million bucks last year, AFCA, basically got in compensation or recompense for people. That's nearly a million bucks a day. Thank you, David. Thank you, David. Enjoy your weekend. Cheers. You are on Saturday magazine. Joy 94.9 with Macaron Fiona. Stay with us. There's more.
Thanks for listening to another Joy podcast brought to you by Australia's LGBTQIA Plus Community Media Organization. Joy, help us keep joy on air. Head to joy.org.au. Joy, a diverse sound for a diverse community.
