Fraud fuels ‘unsustainable’ rise in AFCA complaints against banks and financial companies

Fraud complaints against Australia’s financial dispute resolution system have nearly doubled in the last year, amid warnings it is putting “unnecessary pressure” on independent tribunals.

New figures released by the Australian Financial Complaints Authority (AFCA) show the scheme received more than 100,000 complaints last year, the largest number in its five-year history.

Of those complaints, 8,987 were related to fraud, up from 4,611 in 2022.

AFCA chief executive David Locke said the number of people affected by this issue remained a “huge concern”.

“As we enter the new year, we hope that 2024 is the year that industry and government anti-fraud efforts finally stop this serious organized crime,” Lock said.

AFCA’s dispute resolution scheme is intended to be a last resort for consumers who cannot resolve their dispute by dealing directly with their bank.

But Mr Locke said the volume of complaints received by AFCA was increasing at an “unsustainable rate”, adding that the industry needed to improve across the board.

Locke said: “We believe that many financial companies could do a better job of handling complaints within their own internal complaints processes, so that only the most complex cases reach AFCA. This is our role. “, Locke said.

“Rather, the volume of complaints we receive is putting unnecessary pressure on our external dispute resolution system, inevitably resulting in further delays for consumers.”

AFCA postponed following “significant increase in complaints”

Among those awaiting results from AFCA is Victorian pensioner Charles Haughen, who said fraudsters posing as online security experts accessed his Bendigo Bank account in July last year. He believes he was robbed of $14,000.

The 89-year-old said most of his income went towards accommodation in aged care facilities, and the money was meant as a cushion to pay for additional medical expenses, including upcoming cataract surgery.

He reported the fraud to a local bank branch the same day, and the branch manager helped him report the situation to authorities.

“My local branch manager was very helpful and encouraged me to file a complaint. [AFCA and police],” He said.

But in September, the bank notified him that his money was missing and could not be refunded, so Hoen filed a lawsuit with AFCA.

He wants full repayment of the funds, including thousands of dollars, that the scammers collected on his credit card.

“minimum, [the bank] “I should not be required to repay the $4,500 cash advance and subsequent interest and fees that the scammers transacted on my MasterCard account,” he told AFCA in the complaint.

In an email sent Nov. 15, AFCA told Huoen that the delays were caused by a “significant increase in complaints.”

He is still waiting for his case to be heard.

“They have updated me and said they are currently receiving a very high number of complaints and are waiting to be assigned to someone on their team for investigation and analysis.”

Suggestions to avoid “overloading” AFCA

Last year, the federal government announced a series of anti-fraud measures, including a national task force and an SMS sender ID registry.

In November last year, the Treasury published a consultation paper on a proposed framework to tackle fraud across a range of industries. Once introduced, the framework will require businesses across banking, telecoms and digital platforms to “raise the bar”.

The industry has vowed to introduce new beneficiary verification systems across all Australian banks, including new identity checks for new accounts.

The Australian Bankers Association says ABC fraud prevention will be a major focus in 2024, adding: “All sectors, including governments, banks, telcos, social media, law enforcement and crypto platforms, have a role to play in stepping up the fight against fraudsters. He added, “and individuals”.

But advocates and consumer groups say both government and industry need to do more to combat fraud.

Data released last year showed Australians will lose more than $3 billion to fraud in 2022, an 80 per cent increase from 2021, and losses are expected to continue to rise.

Stephanie Tonkin, from the Center for Consumer Conduct Law, called on the government to adopt measures similar to those in place in the UK, where banks are forced to repay fraud victims.

“The whole idea is that it encourages investment in systems to prevent and stop fraud,” she said.

“Also, if there is a clear law and framework around when a bank is responsible for repaying a customer, this can be addressed at the customer level of that bank.” [and] No need to escalate…then no need to overload AFCA. ”

A report released by ASIC last year found that in Australia, the big four banks repay less than 5% of fraud victims.