Australians lodged an unprecedented 96,987 complaints against financial institutions last year, marking a 34 per cent surge.

The Australian Financial Complaints Authority (AFCA) reports that a major factor behind the spike was the rising financial stress that people faced along with an uphill battle against scammers.

David Locke, AFCA's chief ombudsman, expressed his concern about the escalating number of complaints, saying; “It's not fair on consumers and not good for business”. 

Insurance claims handling emerged as the most complained-about issue during the financial year, witnessing a 76 per cent increase in complaints, with the majority unrelated to natural disasters. 

General insurance complaints rose by 50 per cent, and complaints about claim delays from superannuation funds, including the payment of death benefits, saw a massive surge of 136 per cent.

The second most common complaint category revolved around unauthorised transactions, which surged by 69 per cent. 

These complaints involved financial scams, credit card transactions not authorised by the cardholder, ATM withdrawals using stolen cards, and unsanctioned investment sales.

Scam-related complaints alone soared by 46 per cent last year, reaching a total of 6,048. 

David Locke lamented the human cost of these sophisticated financial crimes and called for a more consistent approach across the sector to combat scams effectively.

The rise in interest rates and the overall cost of living also contributed to the surge in complaints, particularly during the period of April, May, and June when the Reserve Bank lifted the cash rate target to 4.1 per cent. 

Financial difficulty complaints rose by 9 per cent over the year, but during the June quarter, they spiked by 31 per cent compared to the same period in the previous year. 

Complaints related to home loans increased by 10 per cent over the year and were up by 19 per cent during the same quarter. 

Similarly, credit card complaints rose by 15 per cent overall but surged by 34 per cent quarter-on-quarter.

Another troubling trend was the rise in Buy Now, Pay Later (BNPL) complaints, which saw a notable 57 per cent increase.