In its annual review, the Australian Financial Complaints Authority (AFCA) said the rise in SMSF complaints comprised nearly a third of complaints in this area and, combined with the failure to act in a client’s best interest complaints, indicated a trend that highlights persistent risks associated with conflicted advice models and inappropriate use of SMSFs.
David Locke, chief ombudsman and CEO of AFCA, said the authority’s complaints data points to systemic issues in advice models, particularly where conflicts of interest and inappropriate use of SMSFs are involved.
“This underscores the importance of the Compensation Scheme of Last Resort to ensure consumers have access to redress when financial advice fails to be in their best interest,” he said.
The complaints data in the review demonstrates the persistent financial pressures facing consumers, as well as areas where financial firms can do better when dealing with disputes.
In the 2024–25 financial year, and for the second year in a row, AFCA has received more than 100,000 complaints.
“In times of economic pressure, it’s critical that financial firms strengthen their internal dispute resolution processes and ensure resources are available to deal with disputes in a fair and timely manner,” Locke said
The review revealed that in the 2024–25 financial year, banking and finance continued to be the largest complaint type, making up 54 per cent of all complaints. Despite a 17 per cent drop in financial difficulty complaints overall, “failure to respond to a request for assistance” remained in the top five complaint types for the sector.
“We’re calling on all financial firms to stay committed to early resolution and proactive engagement with their customers, particularly those experiencing financial hardship,” Locke said.
“We know more and more families are experiencing hardship due to cost-of-living pressures, and we urge financial firms to genuinely consider these requests with fairness and compassion.”
Large-scale collapses in the financial advice sector continue to result in high volumes of complaints against advisers and financial advice firms – up 18 per cent from last financial year, which has implications for the SMSF sector.
AFCA received 34,231 general insurance complaints, a 17 per cent increase from last year, which was driven by complaints about add-on insurance. Excluding add-on insurance, general insurance complaints remained consistent with the last two years.
“Persistently high volumes of complaints about general insurance demonstrate there is more to be done by the sector to prevent complaints reaching AFCA, particularly in cases where escalation could have been avoided if the issue was simply a claim delay,” Locke said.
“Proactive and clear communication with customers can often be the very thing that stops a complaint from being escalated in the first place.”
