Rise in Small Businesses Complaints to AFCA Indicates Growing Concerns
Rise in Small Businesses Complaints to AFCA Indicates Growing Concerns
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
In the 2022-23 financial year, small businesses lodged a total of 3,807 complaints with the Australian Financial Complaints Authority (AFCA), indicating a significant increase of 9% compared to the previous year.
As a result of these complaints, small businesses received $23.4 million in compensation and refunds, marking a 16% increase from the previous financial year.
Surprisingly, despite the challenging global and domestic economic conditions, AFCA's Lead Ombudsman for Small Business, Suanne Russell, revealed that financial difficulty complaints had actually fallen by 1% to 475 complaints in 2022-23. Considering the rise in personal and corporate insolvencies, this unexpected decrease is an area that AFCA is diligently monitoring.
It is noteworthy to highlight the resilience demonstrated by small businesses post-COVID and in the current economic environment. Despite facing increased costs and higher interest rates, small businesses have remained steadfast and adaptable.
Main Concerns for Small Businesses
Business loans continued to be the most commonly complained about financial product, accounting for approximately one-third of small business complaints received by AFCA. However, there was a notable decrease of 7% in loan-related complaints compared to the previous year. Other top products that drew complaints included business transaction accounts, commercial property, credit cards, and commercial vehicles.
Shift in Small Business Complaint Issues
Service quality emerged as the predominant issue in small business complaints, although there was a 21% decrease in such complaints. The list of top complaints was further complemented by concerns regarding unauthorized transactions (including scam activity), financial firms failing to respond to assistance requests, denial of insurance claims based on exclusions or conditions, and insurance claim amounts.
AFCA's Role in Resolving Small Business Complaints
AFCA is an independent organization that provides free and impartial financial complaints resolution services for both small businesses and consumers. In the 2022-23 period, AFCA received a record-breaking 96,987 complaints, representing an unprecedented rise of 34%. While small business complaints accounted for 4% of the total complaints, the remainder predominantly originated from individual consumers.
It is worth mentioning that not all small business lenders are required to be members of AFCA. Membership is mandatory for Australian Financial Services and Australian Credit License holders, as well as a condition of codes of practice such as the Online Small Business Lenders Code. However, lenders focusing solely on small businesses are not obligated to possess an AFSL or ACL, and hence, do not need to be part of the AFCA Scheme.
Within 60 days of being lodged with AFCA, around 48% of small businesses' complaints were resolved successfully.
Having recently celebrated its fifth anniversary, AFCA has played a pivotal role in securing $106 million in compensation and refunds for small business complainants, following the registration of over 20,000 complaints.
Top 5 Products Resulting in Complaints
Business loans - 1,347 complaints (-7% change)
Business transaction accounts - 1,002 complaints (25% change)
Commercial property - 374 complaints (36% change)
Business credit cards - 304 complaints (51% change)
The Australian Securities and Investments Commission (ASIC) has conducted a comprehensive review of the motor vehicle finance sector, uncovering significant issues that adversely affect consumers. This investigation was initiated in response to a surge in complaints regarding high costs associated with car financing. - read more
Recent research indicates a growing trend among Australian car buyers to delay decisions regarding vehicle financing. A study conducted by carsales reveals that only 71% of buyers have determined their financing method before commencing their vehicle search, a decrease from 77% in previous years. - read more
In a significant development within the Australian financial sector, Macquarie Group's Banking and Financial Services division has agreed to sell a substantial portion of its car loan portfolio, valued at $1.5 billion, to Allied Credit. This transaction involves over 50,000 car loans and is expected to be finalized by the fourth quarter of 2025. - read more
The Australian Securities and Investments Commission (ASIC) has recently conducted a comprehensive review of the motor vehicle finance sector, uncovering significant issues that adversely affect consumers. This investigation was initiated in response to a surge in complaints regarding high costs associated with car financing. - read more
The Clean Energy Finance Corporation (CEFC) has announced a significant partnership with Hyundai Capital Australia (HCAU), committing up to $60 million to reduce the upfront costs associated with electric vehicle (EV) ownership. This initiative is designed to make EVs more accessible to Australian households and small businesses by offering discounted finance rates on eligible Hyundai and Kia electric models. - read more
In this article, we are embarking on a guided journey that we believe will help immensely in navigating the intricacies of the car loan process. - read more
There's a unique thrill that comes with purchasing a new car; it's not just about getting from point A to B, but about fulfilling a dream and the freedom of the open road. However, with the excitement comes the need for careful planning and smart decision-making to ensure that your investment pays off in the long term. - read more
Buying a car is an exciting milestone, but it's crucial to approach the process with a clear financial plan in place. Before you get swept away by the shiny showroom models or the thrill of a test drive, understanding the financial implications of purchasing a vehicle can save you from future stress and unwanted debt. Preparing before applying for a car loan is not just recommended; it's a necessary step that directly influences loan terms and your chances of approval. - read more
Buying a car is a significant financial decision, and understanding the loan terms involved is crucial to navigating this process effectively. Loan terms can dramatically affect how much you end up paying over the life of your loan, and they play a pivotal role in ensuring that you are empowered during the car buying process. These terms determine your monthly payments, interest rates, and the total cost of the car in the long run. - read more
When planning to take out a car loan, it is crucial to start by understanding your budget. Consider how much you can realistically afford to borrow without straining your finances. Assessing your monthly income and expenses will help you arrive at a sensible figure, ensuring you don't overcommit. - read more
Need Help Finding a Loan?
Get a free car loan eligibility assessment and compare offers tailored
specifically to your circumstances.
All finance quotes are provided free (via our secure server) and without
obligation. We respect your
privacy.
Knowledgebase
Price-to-Earnings Ratio (P/E): A valuation ratio of a company's current share price compared to its per-share earnings.
