Amid questions over the quality of super funds’ engagement with members, AFCA complaints have seen a 32 per cent increase in the last financial year.
Numbers released on Thursday by the authority revealed 6957 superannuation-related complaints were made in FY23 compared to 5286 in FY22.
The increase comes as there is a growing expectation funds will be required to take on more responsibilities giving financial advice because of the Quality of Advice Review.
Early glimpses of research being undertaken by CoreData, in partnership with Investment Magazine, found that funds have become focused on maximising investment returns while keeping costs down, at the expense of member engagement and customer service.
Minister for Financial Services Stephen Jones has criticised the sector’s performance on member engagement, using last week’s Investment Magazine Group Insurance Dialogue to threaten further regulatory consequences if the industry doesn’t shape up.
The increase of complaints for the super sector is in contrast to adjacent sectors, life insurance and financial advice. Life insurance complaints saw a 24 per cent decline from 2482 to 1898, while financial advice increased to 4840 in FY23, up 51 per cent from the 3207 reported in FY22.
Although financial advice complaints saw a larger increase than the super sector, AFCA noted this was due to a largely one-time influx from disgraced firm Dixon Advisory (1726 complaints), as well as 656 complaints for foreign exchange-related Best Leader Markets.
Without these, the total in the financial advice sector would have been 2458, a decrease in complaints of 23 per cent compared to the previous financial year.
Dixon Advisory entered voluntary administration last January, with its AFSL suspended a few months later in April, and by August, ASIC encouraged former Dixon Advisory clients to register complaints to AFCA to be eligible for remediation through the Compensation Scheme of Last Resort, hence the influx.
Consumers lodged a record 96,987 complaints in FY23, a 34 per cent increase on the previous financial year which the authority described as an “unprecedented rise”.
In a statement, AFCA chief ombudsman and CEO David Locke drew the focus on this financial years findings not on the financial services sector, but on growing financial stress and “scourge” of scams.
“We are deeply concerned by the volume of complaints consumers are having to escalate to AFCA,” Locke said.
“It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.”
AFCA replaced the Financial Ombudsman Services, Credit and Investments Ombudsman and Superannuation Complaints Tribunal in November 2018.