Financial services failing to provide consistent outcomes: AFCA

Latest findings from the Australian Financial Complaints Authority (AFCA) show that despite frameworks existing for consumer hardship, weaknesses arise in how those policies were implemented in practice.

The eighth edition of the Systemic Issues Insight Report, which accounts for the complaints received and processed in the first half of FY26, noted that financial services businesses have introduced sound frameworks but failed to provide consistent outcomes for vulnerable consumers.

These included inconsistent application of hardship and vulnerability processes, misstatements and missing information on template communications, and the continued collection or enforcement activity when it "should have stopped".

"In some cases, quality assurance processes did not identify where staff were not following the organisation's own policies," AFCA said.

"A number of the matters involved consumers experiencing financial hardship, bereavement, serious illness or other vulnerability. In these circumstances, operational failures such as delays, administrative errors or rigid system processes may have amplified consequences where systems were not sufficiently responsive to individual circumstances."

Based on the ombudsman's investigation, these matters occured during individual interactions, but actions conducted by the firms were "not consistently" adjusted to their frameworks in response. AFCA said it highlights the importance of systems across customer touchpoints and enable appropriate escalation or flexibility where required.

"Taken together, the matters reviewed this period suggest that the effectiveness of consumer protection frameworks increasingly depends on how operational systems, oversight mechanisms and responses to vulnerability function in practice," AFCA said.

AFCA presented what appropriate practices would look like to avoid the issues.

Some of those metrics included clearer operational control for consistent implementation of policies across the business, constant monitoring and review of the appropriacy of its frameworks, and the identification and report of processes that are not operating as intended.

AFCA said escalation that enables emerging issues to be identified and addressed early will also benefit businesses to improve their operation on this front.

Meanwhile, over the six months to December end, AFCA has secured $1.9 million in refunds and financial remediation for affected customers. While that is almost half of what AFCA achieved in the second half of FY25 ($3.4 million), the number of complaints has also dropped significantly from 342,194 to 182,658.