The Australian Financial Complaints Authority’s (AFCA) new report has provided a compelling insight into the nature of banking complaints made by customers to their financial institutions over the past twelve months.
Out of all bank offerings, home loans were the second most common complaint received by the AFCA over the past year, with 9% of the total.
Credit cards were the number one most complained about product receiving 14% of all complaints filed.
A trusted non-government ombudsman service, the AFCA provides “free, fair, and independent” help with financial disputes that occur across the country, along with documenting how many complaints are made and what jurisdiction they fall under.
According to the AFCA, over 70,000 complaints were filed during the last year, and over $240 million in refunds and compensation was paid out to those seeking assistance.
A significant reason why there are fewer complaints regarding home loan services is the response from financial institutions to the COVID-19 pandemic.
Instead of Australians being worse off, measures put in place by mortgage lenders (such as home loan repayment freezes) allowed people to concentrate on surviving the economic hardship that the early stages of the pandemic presented.
This has led to complaints decreasing by 12% in comparison to the previous reporting year.
As part of the report’s release, AFCA’s Chief Ombudsman, David Locke, stated that complaints about financial struggles were drastically reduced.
“Significantly, complaints involving financial difficulty were down nearly 40% from the numbers we saw the previous year,” Mr. Locke explained.
“That’s a great outcome and reflects the positive response from government and industry to the impact of COVID.”
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This information is a guide only and is an estimate only based on the past 12 months of aggregated online mortgage enquiries from eChoice and partner programs.
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While this is positive news that complaints are down and fewer Australians face difficulties with their mortgage payments, it is still an evolving situation.
“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,” Mr. Locke shared.
“It’s important that consumers and financial service providers continue to work together to resolve issues quickly as they emerge. The past 12 months show what’s possible when that happens.”
With the rise in the Delta COVID-19 variant, the big four banks have reintroduced some measures to help customers that are facing hardships.
The foreclosure freeze for Commonwealth Bank customers will continue until at least February 2022, and two-month payment deferrals are also available.
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There have also been no major changes across the Australian home loan industry during the past year as to which banks are the most popular.
As many would expect, the big four have retained the highest market share, with Commonwealth Bank coming in 1st with a total market share of 25.9%.
Westpac, which has the title of being Australia’s oldest financial institution, placed second with 22.5% of home loans under their banner.
The market share between Australia and New Zealand Banking Group Limited (ANZ) and National Australia Bank Limited (NAB) is much tighter, with both lending 14.4% of the total market share.
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In comparison to NAB, ANZ has a larger residential mortgage sector, while NAB’s numbers for housing investment lending are higher.
If these measures continue to remain in place, or more are added in the event of COVID-19 worsening, we may not have seen the last of complaints regarding home loans decreasing.
Words by Rimas Veselis
- Australia’s 10 biggest mortgage lenders in 2021
- Australian banks reinstate loan deferrals, but impact on earnings may be limited
- Home loans are the second most common complaint, say AFCA
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