A worrying new record as Australia’s financial problems continue to worsen

Australia’s financial watchdog says it received a “record” number of complaints last year as the fallout from the collapse of major investment firms rippled through the industry.

In 2015, Australians filed 111,373 complaints in areas including banking, insurance, financial advice, super funds and financial advisors – a 14 percent increase on the previous year, according to a statement released on Thursday.

It is the highest number of complaints the Australian Financial Complaints Authority (AFCA) has ever received in a calendar year.

Consumers and small business owners who brought disputes to the AFCA also collectively pocketed $643 million in compensation and refunds – a 120 percent increase over the previous year and another record.

Advisors, self-managing super in AFCA’s sights

An almost 60 per cent increase in complaints relating to self-managed super funds followed several large-scale collapses in the financial advice and superannuation sector, today’s statement said.

This figure included more than 2,100 complaints relating to the collapse of the Shield and First Guardian Master Funds, which saw thousands of Australians invest their retirement savings in the companies.

Many Australians were convinced by financial advisers to put their retirement savings into the funds, which are now in administration and the subject of multiple legal proceedings.

Last year, SBS’s The Feed spoke to Melburnian Susy Zjak, whose pension balance fell by more than $500,000 overnight after her First Guardian Master Fund collapsed.

“It felt like a knife was hitting my heart,” she told The Feed of the moment she read the email saying her retirement savings may not be recouped.

“I felt dizzy. I just cried. I threw up. I actually thought I was going to have a heart attack. It was the worst nightmare of my life.”

“This is 30 years of work, 30 years of hard work.”

AFCA chief ombudsman and chief executive David Locke said complaints relating to Shield and First Guardian Master Funds will remain a “key focus” in 2026, with more than 500 concurrent investigations still ongoing.

“We have now made 44 decisions, including five main decisions, and 500 concurrent investigations underway, and we remain committed to moving these cases forward as quickly as possible,” Locke said.

We have now made 44 decisions, including five main decisions, and 500 concurrent investigations underway, and we remain committed to moving these cases forward as quickly as possible,” said Chief Ombudsman and Chief Executive Officer David Locke.

AFCA has also issued its thousandth ruling in relation to Dixon Advisory – the “largest series of complaints” it has ever dealt with – with around 900 cases still under investigation.

“We know that the collapse of large-scale financial companies can have a profound impact on people and their families. We are addressing these cases as quickly and carefully as we can, and we are making steady progress,” Locke said.

What is the cause of the peak in complaints?

Complaints about pensions rose by 29 percent to 7,687, largely due to delays in processing claims and disputes over claims decisions.

Although complaints about death benefits remained stable, the main sticking points were timeliness and transparency in the claims process.

Overall, delays in claims processing were the most complained about issue, with 9,274 complaints submitted.

The number of complaints about misleading products or service information has more than doubled: an increase of 110 percent.

Personal transaction accounts were the most complained about financial product (15,315 complaints), followed by motor vehicle insurance (12,879), credit cards (11,316), home building insurance (7,359) and consumer credit insurance (7,137) – an increase of 88 percent.

Since its inception in late 2018, AFCA has received more than 634,000 complaints and secured $2.1 billion in compensation.

Locke said the latest figures came at an important time for the financial services industry and AFCA, and showed the “continued demand for our services”.

“Of a new banking code comes into effectand the major reforms underway in general and life insurance, this is a crucial time for the financial services industry to lift standards and deliver more consistent, accessible and customer-centric outcomes for their customers,” he said.

— With additional reporting by The Feed, Gabrielle Katanasho and Zacharias Szumer.

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