The AFCA received 3,490 complaints from small-business providers in dispute with financial service providers that were 3 per cent less than the previous year.
Small-business complaints accounted for about 5 per cent of the more than 72,000 complaints the ombudsman service registered overall last financial year. The remainder came from individual consumers.
Business loans topped the list of most commonly complained about products in 2020–21. Just over 40 per cent of small-business complaints – about 1,440 disputes – were to do with loans.
The top five most commonly complained about products also included business transaction accounts (800 complaints), commercial property insurance (276), business credit cards (201), and loss-of-profits or business interruption insurance (200).
The top five issues were service quality (389), failure to respond to a request for assistance (282), interpretation of product terms and conditions (271), denial of an insurance claim (204) and default listings (198).
About 13 per cent of small-business complaints involved financial difficulty, down from 19 per cent the previous financial year, AFCA’s Lead Ombudsman for Small Business Suanne Russell said.
“Lower levels of hardship complaints in 2021-22 in part reflect the work the banking sector has been doing in recent years to support customers in difficulty,” she said.
“A further fall in financial difficulty complaints involving small business would be welcomed by everyone, but we are concerned we may see an increase given the end of COVID government support and the current economic environment.
“Higher interest rates may also make that a challenge in the current year but we hope lenders will continue to step up. AFCA will closely monitor the impact of higher rates in complaints from customers in the small business sector.”
AFCA provides an independent and impartial financial complaints resolution service that is free for small businesses and consumers.
Ms Russell said she was pleased to see that more than a third (36 per cent) of the complaints that small businesses escalated to AFCA were resolved at the earliest stage of its process, when AFCA refers a complaint back to the financial firm for further consideration.
“AFCA welcomes early resolution at this stage – as long as the outcome is fair for both parties – because it takes away uncertainty for small businesses,” she said.
If early resolution isn’t possible, AFCA continues to work with the parties to try to help them reach agreement through processes such as conciliation. Failing that, one of its ombudsmen, or a panel of decision-makers, will make a determination. This is a decision that is binding on the financial service provider if it is accepted by the complainant.
Nearly half (47 per cent) of small businesses’ complaints were resolved within 60 days of being lodged with AFCA, though more complex cases took the average time to closure to 112 days (about three and half months).
Just over 10 per cent of small-business complaints progressed to a formal decision in 2021–22.
AFCA has now helped secure nearly $80 million in compensation and refunds for small-business complainants since starting operation on 1 November 2018. It has registered more than 14,800 complaints from small businesses in that time.
