Diving into the Datacube

Another year, another round of AFCA complaint data and another opportunity for brokers and the broader industry to reflect on ways to better improve their complaints handling and internal dispute resolution processes.

While complaints relating to broker conduct remain low, this year saw a considerable increase in the number of complaints received by AFCA.

This year marks the first full 12-month period for the AFCA comparative reporting tool, the Datacube, therefore comparisons with the previous equivalent period will not be entirely accurate. To make comparisons easier, figures from the previous period have been adjusted by 30 per cent.

During the twelve months from 1st July 2019 – 30th June 2020 AFCA received a total of 76,880 complaints an increase of 14 per cent from the previous reporting period when adjusted.

Complaints involving general insurance brokers increased by over 50 per cent from the previous reporting period with AFCA receiving 205 complaints compared to 135 last year. Despite the increase, complaints against brokers still only accounted for just over 2 per cent of all AFCA complaints.

Small business/farm insurance, home building insurance, motor vehicle, home contents and personal and domestic property insurance all recorded the greatest number of complaints. Professional indemnity insurance, which last year received a large number of complaints fell from its top five spot.

Of the 208 complaints received, 13 per cent did not receive a response from the financial firm at the registration and referral stage. This figure is slightly higher than the average across all AFCA jurisdictions and significantly higher than the non-response rate among general insurance brokers last year. Brokers were also less likely to resolve complaints at the referral stage with only 41 per cent of cases involving brokers resolved at this phase, compared to an average of 47 per cent. This figure, however, is a slight increase on last year.

The increase in complaints is largely lead by smaller broker firms, many of whom do not have staff dedicated to complaints handling and may not have as robust internal dispute resolution frameworks.

The figures released by AFCA show the need for all brokers to strengthen these processes. AFCA investigations are often a time consuming and costly process with financial firms required to pay fees when complaints progress to each stage of the AFCA complaints handling model as well as fees for firms who frequently have complaints lodged against them. Brokers may find that strengthening their internal dispute resolution processes may result in cost-savings down the track.