The Australian Financial Complaints Authority (AFCA) has revealed that it received 3807 complaints from small businesses in dispute with financial service providers in 2022-23, a nine per cent increase compared to the previous financial year.
As an outcome of these disputes, small businesses secured $23.4 million from financial firms in compensation and refunds after coming to AFCA, up 16 per cent on $20 million the previous financial year.
AFCA’s Lead Ombudsman for Small Business, Suanne Russell, told AFCA’s recent Member Forum that the national financial dispute resolution service had not seen the increase in financial difficulty complaints that might have been expected amid difficult global and domestic economic conditions.
On the other hand, financial difficulty complaints related to small-business lending fell one per cent to 475 complaints in 2022-23.
“This decrease was not what we were expecting, particularly when we hear of increases in personal and corporate insolvency,” Russell said. “Obviously, this is an area we are watching closely to see if the position changes.
“Small businesses have proven to be incredibly resilient in the aftermath of COVID and in the current economic environment, with increased costs and rising interest rates,” she added.
Business loans were again the most commonly complained about financial product, which accounted for about one in three small business complaints received by AFCA. However, the 1,347 complaints about loans fell by seven per cent from the previous year. The top five financial products that were subject to the complaints were related to business transaction accounts, commercial property, credit cards and commercial vehicles.
Service quality was the top issue in small business complaints, though this type of complaint was down 21 per cent. The top five issues were rounded out by unauthorised transactions – a category that includes scam activity – financial firm failure to respond to a request for assistance, denial of an insurance claim due to an exclusion or condition, and insurance claim amount.
AFCA overall received a record 96,987 complaints in 2022-23, an unprecedented rise of 34 per cent, with small business complaints accounting for about four per cent of those complaints, with the remainder coming from individual consumers. 48 per cent of small businesses’ complaints were resolved within 60 days of being lodged with AFCA.
