AFCA calls for stronger industry response after complaints by Aboriginal and Torres Strait Islander peoples rise record 25%

The number of complaints lodged by Aboriginal and Torres Strait Islander (ATSI) peoples to Australia’s financial dispute resolution scheme surged by 25 per cent over the past financial year, signalling increased engagement with financial products but also highlighting urgent issues that require attention.

The Australian Financial Complaints Authority (AFCA) received 3,161 complaints from Aboriginal and Torres Strait Islander peoples in the 2023-24 financial year. Key issues included unauthorised transactions and delays in insurance claims, with complaints about financial difficulty continuing to be disproportionately high.

"More First Nations people are engaging with AFCA’s free and fair service for resolving financial complaints. Our data shows however a growing need for more effective and culturally appropriate financial services to ensure they can engage in economic and financial activity," said AFCA Deputy Chief Ombudsman, Dr June Smith.

“As complaints rise, so does the need for firms to better understand and serve the unique challenges faced by some communities in accessing even basic services that other Australians take for granted.”

With a record increase in complaints, financial firms need to enhance their service offerings, particularly by addressing digital exclusion in regional and remote communities. This includes improving accessibility and appropriateness of basic banking, superannuation, insurance and credit services, and adopting culturally appropriate practices in claims handling, hardship applications and complaints handling.

As the financial sector moves increasingly online, branch and ATM closures, heightened security protocols, and complex identification checks are creating unique barriers for many First Nations customers to accessing the services they need to engage in economic and financial activity.

“We encourage all financial institutions to reflect on how they are currently engaging with First Nations customers and to make the necessary changes to ensure they are providing genuine, tailored and culturally appropriate assistance,” Dr Smith said.

The three most complained about products by First Nations peoples were personal transaction accounts, personal loans, and comprehensive motor vehicle insurance. Common issues included unauthorised transactions— often linked to scams — and delays in insurance claim handling.

Of particular concern is the rise in complaints related to financial difficulty, which jumped 17 per cent. One in 10 complaints from First Nations people was related to financial hardship — double the rate of complaints about hardship from the general population. Failure by firms to appropriately respond to hardship requests was one of the top three issues raised by First Nations complainants.

“It’s deeply concerning to see such high rates of complaints about the failure to respond to requests for assistance for First Nations people in financial difficulty. This is an area where firms must meet their legal obligations,” Dr Smith stressed.

In addition, there was a 47 per cent surge in complaints about comprehensive motor vehicle insurance claims, and a 24 per cent rise in complaints about insurance claim delays.

“These figures point to serious challenges faced by First Nations customers in accessing fair and timely insurance services,” Dr Smith said. “This highlights a critical need for the industry to address these concerns and ensure that general insurance is equitable and responsive to the needs of all customers."

First Nations people are also being excluded from accessing and engaging with their superannuation due to funds not ensuring ID requirements are culturally appropriate and failing to recognise cultural kinship practices or that for many First Nations people, English is a second language. Dr Smith has called on superannuation funds to act on long standing requests to change their processes.

As part of its commitment to reconciliation and financial inclusion, AFCA has tailored the way it manages complaints from First Nations peoples that is culturally informed, respectful and accessible. Guided by its Reflect and Innovate Reconciliation Action Plans, AFCA's efforts to purposefully enhance its services include ensuring complainants receive tailored assistance, particularly for those who may be experiencing hardship or digital barriers.

“We understand that engaging with the AFCA complaint process can be stressful, especially for those facing financial or personal challenges. That’s why AFCA provides additional support where needed, including offering flexibility in service delivery and timeframes and allowing people to appoint representatives,” Dr Smith said.