Finance company Flexigroup has a poor record of dealing with customer complaints. The Australian Financial Complaints Authority received 304 complaints from customers of its Flexirent business over the past year. The company did not respond to any of those complaints when AFCA was taking them through the initial stages of its process – a time when the company has a chance to sort the issue out before it goes to an AFCA case manager.
AFCA also received five complaints from Flexigroup’s consumer finance business Oxipay, with the same outcome: no response from the company as the complaints progressed to case management.
AFCA has calculated a non-response rate for companies under its jurisdiction. The non-response rate is the percentage of complaints that progressed to the case management stage of the complaint resolution process without a response from the financial services company at the initial stage.
In other words, these companies did nothing to help resolve the problem before they were forced to.
Other businesses with a 100 per cent non-response rate include Yamaha Motor Finance, which had 14 complaints, credit reporting agency Experian (five complaints), fund manager Global Merces (four complaints).
The focus on the AFCA data, which came out last week, will be on the financial services providers with the highest number of complaints. Commonwealth Bank wins that hands down with 3890 complaints – more than 1000 more than the next highest, ANZ.
However, it is worth noting that CBA resolved 2117 of those complaints when they were referred back by AFCA. Its non-response rate was just 5.6 per cent.
The bank deserves some credit for committing resources to dealing with complaints. Not so Flexigroup and the other “100 percenters”.
Perhaps most disturbing are the companies with relatively high numbers of complaints and also relatively high non-response rates. These are companies that attract more than their fair share of complaints and appear to do very little to resolve them on their own behalf.
Companies in this category include Citigroup, which had 1385 complaints and a non-response rate of 37.8 per cent.
AFCA received 975 complaints about Latitude and the company’s non-response rate was 30.4 per cent.
PayPal had 833 complaints and a non-response rate of 31.2 per cent.
American Express had 829 complaints and a non-response rate of 32.9 per cent.
HSBC Bank Australia had 340 complaints and a non-response rate of 24.7 per cent.
Pioneer Credit, a debt collector, had 331 complaints and a non-response rate of 42.6 per cent.
Zurich had 285 complaints and a non-response rate of 38.6 per cent.
Toyota Finance has 276 complaints and a non-response rate of 31.4 per cent.
Nulis Nominees, a superannuation fund, had 243 complaints ad a non-response rate of 53.5 per cent.
TAL Life has 212 complaints and a non-response rate of 41.8 per cent.
Consumers of financial services should beware. It’s worth keeping in mind that 86 per cent of AFCA’s 37,488 members did not have a complaint lodged against them. It’s not that hard to find financial institutions that don’t cause their customers grief.
AFCA released its annual report last week, reporting that between 1 November last year, when it started, and 30 June this year it received 47,223 complaints.
It resolved 67 per cent of them, awarding $112 million of compensation.
Sixty per cent of complaints were about banking and finance, 23 per cent about general insurance, 9 per cent about superannuation, 5 per cent about investments and advice and 2 per cent about life insurance.
By product type, credit cards attracted the most complaints (7112), home loans 4085, personal loans 3724, motor vehicle insurance 2680 and home building insurance 1887.
The biggest issue was credit reporting (3149 complaints), followed by unauthorised transactions (2927) delays in insurance claims handling (2716), incorrect fees (2477) and service quality (2405).
AFCA said the high number of complaints relating to credit reporting reflects the fact that it is often raised as a secondary issue in a complaint about another matter.
The large number of complaints about unauthorised transactions indicates a large number of cases involving scams, where the scammer tricks the customer into transferring funds or providing access to their account.
“The methods used by scammers have become increasingly sophisticated and are desiged to overcome a financial firm’s unauthorized transaction procedures.”
AFCA said it saw a large number of complaints about responsible lending in relation to credit cards, personal loans and home loans.
Eighty-six per cent of AFCA’s 37,488 members did not have a complaint lodged against them. Among its membership, mortgage brokers make up the biggest group, with 2075 members, followed by finance brokers, financial planners, credit providers and accountants.
AFCA identified a number of systemic issues (issues that had a wider impact than just the customer making the complaint). These included non-compliance with responsible lending obligations, system errors and inadequate resourcing and handling of internal complaints functions.
It referred 24 “possible serious contraventions” to regulators.