Banks accused of ‘appalling’ treatment of customers

New complaints body is receiving 5900 complaints a month – mostly about the banks.

bank complaints

As federal Treasurer Josh Frydenberg lashed two of the Big Four banks for not immediately passing on the Reserve Bank’s interest rate cut to customers, the chair of the new government financial dispute authority has launched her own attack, accusing the banks of “appalling” treatment of customers.

The Australian Financial Complaints Authority (AFCA) opened last November, before the scathing findings of the financial services royal commission were handed down by Commissioner Kenneth Hayne. It was initially averaging 310 complaints per business day; this has ‘settled’ to 5900 complaints a month.

Chair Helen Coonan says AFCA “is playing an important part in restoring shattered community trust and confidence in the financial services sector” and has accused banks of “arrogant indifference” to risk.

It received 35,000 complaints in its first six months, awarded customers $83 million in compensation and identified 85 cases of “systemic” risk, where an issue is likely to affect a class of people beyond the original complainants, The Age reports.

Community trust in the sector had been “shattered”, with financial institutions causing “despair and hopelessness in many broken lives and broken businesses”, Ms Coonan said.

Thousands of consumers had felt “badly let down” by financial institutions as far back as the global financial crisis.

“Poor culture in financial institutions has been fingered as the main culprit that permitted a slew of bad practices, appalling treatment of consumers and small businesses, and in many cases arrogant indifference to regulatory and compliance risk," she said.

“The task ahead of banks to address the poor culture deeply embedded throughout their organisations is, no doubt, a monumental one.

“Now almost seven months old, AFCA is playing an important part in restoring shattered community trust and confidence in the financial services sector.”

Sally Tindall, research director at financial comparison site RateCity, said that despite Tuesday’s interest rate cut, banks could be encouraged to offer more competitive rates if customers used their collective clout.

“If term deposits and savings accounts continue to fall, people may start seeking alternatives that come with greater risk, like on the stockmarket or peer-to-peer lending,” she said.

“If people stopped putting money into the bank, it would force banks to be more competitive in this space.”

In addition to the complaints service offered by the AFCA, there is another positive development on the financial services front – Australians will soon know which bank or super fund is the worst to deal with.

The Australian Securities and Investments Commission (ASIC) is consulting with the financial services sector on new standards governing how banks, insurers, superannuation funds and other providers of financial services, such as credit issuers, handle customer complaints.

Under the proposals, consumers will be able to look up data – from June 2021 – that compares how quickly financial institutions resolve disputes.

The proposals are expected to receive significant resistance from the sector.

ASIC says that financial groups will need to dramatically reduce the time taken to respond to complaints. A report last December found that 3.2 million people aged 18 and over – or 17 per cent of the adult population – had considered making a complaint to a financial service provider in the proceeding 12 months, but only 1.5 million actually made a complaint.

The report also found that 18 per cent of surveyed complainants dropped out or withdrew their complaint before it was concluded, mostly because it took too long to resolve the matter.

Almost half of the complaints were about fees and charges, while a quarter related to customer service issues and one-in-five about a decision made by the company, The Age reports.

Has your trust in banks and other financial institutions been restored in the months since the royal commission? Have you had cause to make a complaint to the AFCA?

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    COMMENTS

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    TREBOR
    7th Jun 2019
    10:16am
    Another 'trigger term' added to the list - BANKS!!

    Send ten a week to the guillotine until the rest get the message...
    TREBOR
    7th Jun 2019
    10:18am
    Helen Coonan - another party favourite handed yet another income for life job.... stuff the peasants - add their home to the assets test for pension...
    Ahjay
    7th Jun 2019
    11:02am
    If advisors and investment agencies work for any institution that pays dividends to share holders, they are working for the shareholders, not the investor. How can they then be working in the best interest of the client. It is criminal. The advisors themselves,not the institution should be prosecuted.
    People must educate themselves.
    mogo51
    7th Jun 2019
    12:56pm
    Banks have been arrogantly robbing the public for decades. Going to take awhile for the to chgvange their disgustingly bad habits
    travelman
    7th Jun 2019
    1:47pm
    I would have no trust in the AFCA since they are an institution of the government and whose powers are limited and controlled by the government - namely the Treasurer, Josh Frydenberg. Since his competence is questionable and also, as a politician, he has trouble with the truth. Personally, if an ordinary citizen had committed the crimes, the bank executives committed, they would be serving prison sentences. And I assured this government including the Prime Minister (who is a Christian) will take little or no action; playing for time as other unrelated problems arise and thus just be another problem swept under the political carpet. Thank goodness I have banked with a credit union since 2005 with no fees, good service, good interest rates and I was able, as a pension, to get a 25 year mortgage with them when all the major banks rejected me and I having $100,000 in my credit union account and a good credit rating. The credit union was People's Choice Credit Union and I am proud to say their name. The best competition and the best deal one can get is to switch to a credit union.
    johno
    7th Jun 2019
    3:34pm
    The banks are not the only ones behaving appallingly. The base interest rate has been cut but the Federal Government is still keeping the deeming rate at 3.25% so anyone using interest on savings to supplement their pension are already loosing at least 2% on their money. Talk about calling the kettle black
    Tood
    7th Jun 2019
    4:09pm
    The leopards are never going to change their spots! And as for the 'innocent caring' govt what about doing something about deeming rates which are extortionately high, while the bastards are getting another pay rise to "keep people of high calibre"!, give me a break!!!!.

    7th Jun 2019
    5:54pm
    Axiom: "All banks are total bastards".
    Tricky
    7th Jun 2019
    7:39pm
    Treasurer lashes out at Banks but the government will not review or lower the high Deeming Rate at Centrelink currently at 3.25%
    Erin
    7th Jun 2019
    8:33pm
    I'm one of the victims who was initially told last July that I was not entitled to a refund for fees for no service. However they then decided to make me an offer but when I asked if it included interest they said I was not entitled to interest because it was 'goodwill gesture' and/or an 'ex gratia payment' and kept insisting that it was not a refund.
    This went on for about 5 weeks with continuing false and deceptive claims. They also sent me a copy of the agreement I signed in 2009.
    The whole process caused me overwhelming stress and anxiety, both mental and physical, which is still affecting me as an elderly pensioner. They actually put the onus on me, causing me to spend days and nights for weeks on end researching the web via Google to find whether their claims were false or not as I believed that they would be stupid to make such deceptive claims if they were false. I even sent them copies of Regulations and Media Releases I had found that ASIC had issued to all Financial Institutions going back as far as 2015 - they ignored them and continued with their unconscionable and criminally fraudulent behaviour. I'm so happy that I lodged a formal complaint with the AFCA and trust that they will handle my issue as required, together with some sort of compensation for the ordeal I was put through which was completely unnecessary. I had expected that my request last July would have taken only 3 - 4 weeks to be resolved.
    They totally lack integrity, which is a steadfast adherence to a strict moral or ethical code and the practice of being honest which is truthfulness and freedom from deceit or fraud, and I really hope that they will be further penalised for their actions.
    in2sunset
    18th Jun 2019
    5:36am
    Erin - I totally understand your experience. I too have found the banks totally and completely utter bullies.
    I am single, on the Aged pension - not by choice, but a combination of losing my job, and health issues, still with a mortgage. Really struggling to make ends meet, and the stress was only exacerbating my health problems. Over and over you hear them say - "don't leave it too late - speak to your bank". What a mistake that was!
    I first approached a Community Financial Advisor, and they wrote to the bank on my behalf. I recently received a disgusting letter from the bank, saying they had tried to contact me to discuss (they haven't) and therefore any request for assistance was declined, and they seek full payment of the debt. The letter was rude, harsh, and accusatory. NO discussion, NO assistance, not even the slightest hint of any willingness to consider my offers.
    I now honestly feel it was a huge mistake to talk to the bank. Contacting them has led to MORE stress, not less. NO attempt has been made to contact me, that is a blatant lie. Even phoning them to discuss the matter has been met with a total brick wall.
    Yet I personally know of a person running their own business, doing extremely well, but going through a messy divorce. She approached the bank - and they immediately wiped $60,000 off her loan due to 'hardship'. Seems the banks are more keen on making seniors homeless.
    Wstaton
    7th Jun 2019
    8:52pm
    No one seems to have taken up the high interest rates on credit cards. I for example ended up with a high credit card debt due to unforeseen circumstances. (My fault) But since then I have endeavored to reduce it but find impossible. The interest comprises 30% of my income which is not very much. I just exist on the remainder. This means ther is no way I can reduce it. I cannot even go to those that offer reduced interest rate as being a senior I would not pass their requirements. I feel that there are probably a lot of people in the same situation.
    musicveg
    22nd Jun 2019
    2:19am
    Check out Scott Pages website, the Barefoot Investor, he has a place to ask a question, he may have helpful advice, it is worth a try.
    musicveg
    22nd Jun 2019
    2:20am
    I have not banked with a big bank for years, credit unions are much better.