Tougher insurance laws and better hardship programs for bank customers have seen a drop in the number of complaints lodged with Australia’s financial ombudsman.
In its annual report, the Financial Ombudsman Service says the number of disputes between customers and their financial institutions dropped by 11 per cent in 2012-13 to 32,307.
That follows a big jump in complaints over the previous few years because of the global financial crisis and the Queensland floods.
Chief ombudsman Shane Tregillis says a new national flood definition has lead to fewer disputes over insurance claims for natural disasters.
“We think they’ve had a major impact on the number of disputes,” he said.
“Recent events have shown that through natural disasters, claims have been high but we certainly have not seen the number of disputes we saw as a result of the Queensland floods and other natural disasters.”
Home loan and credit card disputes most common complaints
The majority of complaints were about banks in 2012-13.
Disputes about home loans and credit cards were the most common complaints with 49 per cent of disputes about credit products or 12,408 complaints accepted by the Ombudsman, down six per cent from 2011-12.
That is mainly because the number of financial difficulty disputes fell by nearly one quarter.
Mr Tregillis says the decline was due to the introduction of new national consumer laws in 2010.
“This appears to be a result of the improvements by the major banks and other financial service providers to their financial hardship programs over the last few years,” he said.
However, complaints about maladministration in lending cases more than doubled from 333 in 2011-12 to 706 disputes in 2012-13.
This could include a bank failing to verify the income of a home loan customer.
The service has begun a pilot program aimed at identifying maladministration issues.
A total of 37 instances of systemic issues were resolved by the financial ombudsman and nearly 14,000 customers were compensated for losses to the tune of $2 million.
Five cases of serious misconduct were reported to the corporate regulator, the Australian Securities & Investments Commission.
FOS has also warned consumers about the advertising of sickness and accident insurance products.
It says products advertised on the basis that no medical exam is required but which contain policy exclusions covering pre-existing medical conditions could mislead customers.
The financial ombudsman is considering whether a warning needs to be provided at the time of advertising.
The free service is a complaints resolution mechanism which is funded by its members including big banks and other finance companies.
It is answerable to ASIC.