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

AIST webinar 7 October 2020

Presenter: Heather Gray, Lead Ombudsman - Superannuation

AFCA Briefing Complaint trends

The last 12 months’ operations

1 October 2019 to 30 September 2020

Slide 2 41% 25% 9% 9% 6% 6% 2% 2%

Complaints received by product line

Credit General Insurance Deposit Taking Superannuation Payment Systems Investments Life Insurance Other

80,833 complaints received

As at 30 September 2020 79% have been closed

1 One complaint can have multiple product lines.

27,922 16,390 9,801 4,598 2,486 Bank General insurer Credit provider Superannuation fund trustee or advisor Debt collector

• r buyer

Complaints received by top 5 financial firm types

The last 12 months’ operations

1 October 2019 to 30 September 2020

Slide 3

$163.6 million in compensation and refunds obtained through AFCA 1

Small business

We received 3,430 (4%) complaints from small businesses. Most complaints were about misleading product/service information. 19% of licensee members had a complaint lodged against them in the last 12 months

Systemic issues

Definite systemic issues currently under investigation 31 Total potential serious contraventions and other breaches identified since 1 October 2019 48

1 This includes matters previously received by AFCA’s predecessor, Financial Ombudsman Service,

and resolved by AFCA since 1 November 2018.

Super Statistics

Australian Financial Complaints Authority

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Super complaints received in the last 12 months: Number Total complaints received 7,464 Resolution rate at R&R 35%

Super Statistics

Australian Financial Complaints Authority

Slide 5

Top 6 products

Super Statistics

Australian Financial Complaints Authority

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Super decisions closed in the last 12 months

Australian Financial Complaints Authority

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% Outside Terms of Reference 3 0% 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% Resolved by FF 2,955 39%

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As of 28 September 2020

Significant event

COVID-19

Australian Financial Complaints Authority

Slide 9

COVID-19 complaints

Open and closed complaints by product

Product Total Open Closed Total 8356 2020 6336 Banking and Finance (including Financial Difficulty) 3697 924 2773 Financial Difficulty 1589 364 1225 General Insurance (including Travel insurance) 3414 834 2580 Travel insurance 2895 606 2289 Superannuation 1059 177 882 Life insurance 77 31 46 Investments and Advice 114 60 54

COVID-19 Super Complaints

Australian Financial Complaints Authority

Covid-19 complaints:

Of all super complaints received, those relating to COVID-19 are:

1,071

COVID-19 complaints open as at 30 September 2020

183 17%

COVID-19 complaints closed

888 83%

COVID-19 complaints closed by outcome: Assessment

9 1%

Conciliation

3 0%

Determination Trustee decision affirmed

5 1%

Discontinued

51 6%

Negotiation

76 9%

Outside Rules

18 2%

Outside Terms of Reference

1 0%

Preliminary Assessment in Favour of complainant

1 0%

Preliminary Assessment in Favour of FF

2 0%

Resolved by FF

722 81%

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COVID-19 complaints

Australian Financial Complaints Authority

Slide 11

Australian Financial Complaints Authority

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COVID-19 approach

> AFCA is working closely with the Government, regulators, peak bodies, consumer groups and our members to respond proactively to the challenges

• f 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

• n its website https://www.afca.org.au/coronavirus-

covid-19-pandemic-support-hub/superannuation

COVID-19 common themes

Australian Financial Complaints Authority

> 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

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Insurance – PYS and PMIF

Australian Financial Complaints Authority

> 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

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Death Benefits

Australian Financial Complaints Authority

> Rules – timeframes > Allocation of death benefits > Challenging de facto status > Challenging financial dependant or interdependency status > Position of parents > Whether insurance cover in place

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AFCA approach to superannuation death benefit complaints

Australian Financial Complaints Authority

> 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

Slide 16

RG 271

Australian Financial Complaints Authority

> 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

Slide 17

Questions?