AFCA Briefing Complaint trends AIST webinar 7 October 2020 - PowerPoint PPT Presentation

AFCA Briefing Complaint trends AIST webinar 7 October 2020 Presenter: Heather Gray, Lead Ombudsman - Superannuation

The last 12 months’ operations 1 October 2019 to 30 September 2020 80,833 complaints received Complaints received by product line As at 30 September 2020 2% 2% 79% have been closed Credit 6% Complaints received by top 5 financial firm types General Insurance 6% Deposit Taking 27,922 9% 41% Superannuation 16,390 Payment Systems 9% 9,801 Investments 4,598 2,486 Life Insurance Bank General insurer Credit provider Superannuation fund trustee or advisor Debt collector or buyer 25% Other 1 One complaint can have multiple product lines. Slide 2

The last 12 months’ operations 1 October 2019 to 30 September 2020 19% of licensee members had $163.6 million in compensation and refunds obtained through AFCA 1 a complaint lodged against them in the last 12 months Small business Systemic issues We received 3,430 (4%) complaints Definite systemic issues currently from small businesses. under investigation 31 Most complaints were about Total potential serious contraventions misleading product/service and other breaches identified information. since 1 October 2019 48 1 This includes matters previously received by AFCA’s predecessor, Financial Ombudsman Service, Slide 3 and resolved by AFCA since 1 November 2018.

Super Statistics Super complaints received in the last 12 months: Number Total complaints received 7,464 Resolution rate at R&R 35% Australian Financial Complaints Authority Slide 4

Super Statistics Top 6 products Australian Financial Complaints Authority Slide 5

Super Statistics Australian Financial Complaints Authority Slide 6

Super decisions closed in the last 12 months Super complaints closed in the last 12 months: 7,556 Super complaints closed by outcome Assessment 230 3% Conciliation 74 1% Decision in Favour of complainant 3 0% Decision in Favour of FF 12 0% Determination Trustee decision affirmed 452 6% Determination Trustee decision remitted 6 0% Determination Trustee decision substituted 54 1% Determination Trustee decision varied 6 0% Discontinued 918 12% Negotiation 1,945 26% Outside Rules 439 6% 3 0% Outside Terms of Reference Prelim Assessment: Trustee decision affirmed 50 1% Prelim Assessment: Trustee decision remitted 1 0% Prelim Assessment: Trustee decision substituted 4 0% Prelim Assessment: Trustee decision varied 6 0% Preliminary Assessment in Favour of complainant 61 1% Preliminary Assessment in Favour of FF 337 4% Australian Financial Complaints Authority Slide 7 Resolved by FF 2,955 39%

Significant event COVID-19 As of 28 September 2020

COVID-19 complaints Open and closed complaints by product Product Total Open Closed Total 8356 2020 6336 Banking and Finance 3697 924 2773 (including Financial Difficulty) Financial Difficulty 1589 364 1225 General Insurance 3414 834 2580 (including Travel insurance) Travel insurance 2895 606 2289 Superannuation 1059 177 882 Life insurance 77 31 46 Investments and Advice 114 60 54 Australian Financial Complaints Authority Slide 9

COVID-19 Super Complaints Covid-19 complaints: Of all super complaints received, those relating to COVID-19 1,071 are: 183 17% COVID-19 complaints open as at 30 September 2020 888 83% COVID-19 complaints closed COVID-19 complaints closed by outcome: 9 1% Assessment 3 0% Conciliation 5 1% Determination Trustee decision affirmed 51 6% Discontinued 76 9% Negotiation 18 2% Outside Rules 1 0% Outside Terms of Reference 1 0% Preliminary Assessment in Favour of complainant 2 0% Preliminary Assessment in Favour of FF 722 81% Resolved by FF Australian Financial Complaints Authority Slide 10

COVID-19 complaints Australian Financial Complaints Authority Slide 11

COVID-19 approach > AFCA is working closely with the Government, regulators, peak bodies, consumer groups and our members to respond proactively to the challenges of COVID-19. > Where appropriate, we will modify our existing approaches and outcomes > We have extended some of our timeframes: Financial firms now have 30 days to respond when AFCA notifies them of a complaint – up from 21 days, and 21 days to provide an initial response when a complaint reaches the case management stage – up from 7 days > We are providing factsheets and information on emerging issues. > AFCA has details about early release of benefits on its website https://www.afca.org.au/coronavirus- covid-19-pandemic-support-hub/superannuation Australian Financial Complaints Authority Slide 12

COVID-19 common themes > Failure to pay within 5 business days > Problems with ID > Payment made to wrong bank account > Wrong amount paid > Account balance rolled over after request made > Complaints to AFCA have slowed significantly Australian Financial Complaints Authority Slide 13

Insurance – PYS and PMIF PYS – transfer of low balance inactive accounts (less than $6,000) to ATO; cancellation of insurance > for inactive members (16 months of inactivity) PMIF – funds cannot provide opt-out insurance for members under age 25, or where balance is less > than $6,000 (unless member opts-in) > Compulsory notifications Complaints to AFCA – notices not received, notices not clear, opt-ins not actioned, notices not read, > reinstatement refused Australian Financial Complaints Authority Slide 14

Death Benefits Rules – timeframes > > Allocation of death benefits Challenging de facto status > > Challenging financial dependant or interdependency status Position of parents > > Whether insurance cover in place Australian Financial Complaints Authority Slide 15

AFCA approach to superannuation death benefit complaints > Available on AFCA website ‘The purpose of a superannuation death benefit is to provide for those dependants of a > superannuation fund member who would have continued to rely on the member for financial support, but for the member’s untimely death.’ ‘preference is given to those dependants who might have expected to continue to receive financial > support from the member’ ‘Adult children may receive a share of a death benefit if they can show they were financially > dependent on the deceased member at the date of the member’s death with an expectation that this support would continue but for the member’s death. Alternatively, they can receive a share of a death benefit if there are no other dependants who were financially dependent on the deceased member or who had a reasonable expectation of support from the deceased member.’ Was the trustee’s decision fair and reasonable in all the circumstances? > > AFCA bound by governing rules Australian Financial Complaints Authority Slide 16

RG 271 Welcomed by AFCA > > Enforceable IDR requirements and standards Apply to complaints received by financial firms on or after 5 October 2021 > > Maximum timeframe for IDR response Superannuation complaints (not death) – 45 days (down from 90 days) > Superannuation death benefit distribution complaints – 90 days after 28 day objection period > Written reasons for super death benefit decisions – give to non-complaining beneficiaries as well as > complainants Resourcing must be adequate > Australian Financial Complaints Authority Slide 17

Questions?