Financial Complaints Hit 120,000 as Cost of Living Bites

AFCA recorded a third straight year above 100,000 complaints in 2025-26, with banking disputes surging 23% as borrowers struggle with cost-of-living pressure.

A Record Year for Financial Disputes — What the Numbers Say

For the third consecutive year, formal complaints about financial institutions have topped 100,000. The Australian Financial Complaints Authority (AFCA) recorded 119,949 complaints in 2025-26 — the highest total since the scheme launched in 2018 — as persistent cost-of-living pressures translated into friction between consumers and their banks, insurers, super funds, and financial advisers.

As The Adviser reports, banking and finance remained AFCA's largest complaint category by a wide margin, accounting for 66,971 cases — a 23% increase on the prior year. Financial difficulty complaints within banking rose 17%, and credit reporting complaints climbed 22%, with AFCA noting a "steep rise" in recent months.

AFCA chief customer officer Deborah Jenkins said the numbers reflect what Australians are living through. "These numbers highlight the impact that ongoing cost-of-living challenges and economic uncertainty are having on consumers, and the flow-on effects these conditions can have across the financial system. Every complaint represents someone's experience, and collectively they provide a view of where consumers are struggling."

Where the Complaints Are Coming From

The data reveals a financial system under strain across multiple fronts.

General insurance complaints reached 36,022, up 5% on the prior year. Superannuation disputes surged 42% to 8,755, partly driven by fallout from high-profile fund failures. Investments and advice complaints recorded the fastest growth of any category, jumping 56% to 6,542 — largely linked to the collapse of the Shield Master Fund and First Guardian investment schemes. Life insurance complaints edged up 3% to 1,561.

Scam-related complaints rebounded after a brief decline, rising 12% to 6,706. Jenkins warned this trend is likely to continue. "Scammers are becoming more sophisticated in how they target consumers. Resolving disputes is important but preventing scams before they happen is even better."

Across all product types, the three most complained-about items in 2025-26 were personal transaction accounts, motor vehicle insurance, and credit cards. The leading issues were delays in claim handling, concerns about service quality, and claim rejections.

Jenkins noted these patterns point to fixable operational problems. "These numbers point to opportunities for firms to strengthen hardship support, improve communication with customers and ensure accurate credit reporting, helping resolve issues before they become disputes," she said.

About 43% of complaints were resolved before reaching AFCA's formal decision process. Since the scheme began in 2018, AFCA has handled roughly 690,000 complaints and helped secure around $2.6 billion in compensation or refunds for consumers and small businesses.

What This Means If You Are Struggling with Your Mortgage

The sharp rise in financial difficulty and credit reporting complaints has a specific message for mortgage holders. When borrowers fall behind or request hardship arrangements, the flow-on effects — including adverse credit listings — can compound financial difficulties significantly. If your lender has recorded a default on your credit file that you believe is inaccurate, or if you have not yet explored hardship options you may be entitled to, acting early makes a material difference.

Under Australian law, lenders are required to consider genuine hardship applications and must not list a default while a hardship request is being assessed. If you believe your lender is not following the right process, AFCA provides free dispute resolution as an alternative to the courts.

For borrowers managing their repayments but feeling the squeeze of higher rates, the most practical first step is often checking whether you are still on a competitive rate. Many borrowers who refinanced 12 to 18 months ago may find that better deals have since emerged. Comparing refinance home loans takes only minutes and can reveal savings that make a meaningful difference to your monthly budget. Use the refinance savings calculator to see how much a rate reduction could put back in your pocket each month.

If you are a first-home buyer wondering whether you can get into the market despite current rate levels, the borrowing power calculator gives you a quick read on where you stand, and our first-home buyer hub covers the schemes and deposit support options available right now.

The record complaint numbers are a signal worth heeding: more Australians than ever are running into difficulty with their financial institutions. The best way to avoid becoming one of them is to stay on top of your lending arrangements and seek guidance early if the pressure is building.