AFCA helps small business reclaim $23m, disputes up 9%
Compensation and refunds have risen 16 per cent, but the ombudsman is surprised by a fall in complaints over business loans.
Small businesses made almost 4,000 complaints to AFCA in the last financial year, up 9 per cent, and won more than $23 million in compensation and refunds, the authority says.
Disputes over business loans – the leading cause of friction – actually fell slightly but there were marked increases in complaints over commercial property (up 36 per cent) and credit cards (up 51 per cent).
With 3,807 disputes, businesses accounted for 4 per cent of the record total of 96,987 in FY23, which was up by “an unprecedented” one-third.
The lead ombudsman for small business, Suanne Russell, said AFCA had been surprised there were not more complaints from businesses given the difficult economic conditions.
In particular, financial difficulty complaints related to small business lending fell 1 per cent to 475.
“This decrease was not what we were expecting, particularly when we hear of increases in personal and corporate insolvency,” Ms 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.”
AFCA said small businesses secured $23.4 million from financial firms in compensation and refunds, up 16 per cent from $20 million the previous financial year.
Business loans accounted for about one in three small business disputes, although they dropped 7 per cent. The next most complained about products concerned transaction accounts, commercial property, credit cards and commercial vehicles.
The top five issues were service quality, unauthorised transactions (including scam activity), failure to respond to a request for assistance, denial of an insurance claim due to an exclusion or condition, and insurance claim amounts.
Nearly half of small business complaints were resolved within 60 days of being lodged.
Ms Russell said not all small business lenders were required to be members of the AFCA scheme, although it was mandatory for AFS and Australian Credit Licence holders.
It was also a condition of codes of practice such as the Online Small Business Lenders Code, although lenders who worked solely with small businesses were not required to hold an AFSL or ACL and therefore did not have to belong to the AFCA scheme.
AFCA, a non-government dispute resolution service for consumers and small businesses, recently marked its fifth anniversary. In that time, it had registered more than 20,000 complaints from small businesses in connection with banking and finance, insurance, investments and advice, and superannuation.
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