Consumers becoming more willing to escalate complaints to AFCA, warns mortgage aggregator
Mortgage aggregator Connective has emphasised the growing importance of robust compliance standards amid shifting complaint trends in the broking industry.
Complaints in Australia’s financial services sector hit new highs in 2024, with the Australian Financial Complaints Authority (AFCA) reporting an 8% increase in complaint volumes on a year-on-year basis.
While mortgage and finance brokers make up a small portion of these cases, the nature of complaints is becoming increasingly complex.
Connective’s compliance team has observed that complaints are no longer limited to simple issues like fixed-rate break costs or administrative slip-ups.
Instead, they are increasingly linked to consumer awareness, economic pressures and broader interpretations of broker responsibilities – from Best Interests Duty disputes to issues arising out of referrals and commercial client arrangements.
“The rise in complaint volumes is often not a reflection of brokers providing poorer service,” said Daniel Oh, group legal counsel at Connective. “Instead, consumers are more willing to escalate issues, often going straight to AFCA rather than their broker, and AFCA itself is engaging earlier in the process.
“The result is that complaints are more complex, less predictable and sometimes very costly for brokers to resolve.”
Oh stated that this shift means brokers cannot afford to treat compliance as a box-ticking exercise.
In a recent webinar delivered to its members, Connective’s compliance team outlined several areas where brokers can strengthen their risk management:
- Record-keeping matters: Maintain detailed file notes for every client conversation and decision. Comprehensive records are essential for demonstrating compliance and can serve as vital evidence if a complaint arises
- Carefully scrutinising all documents: Including payslips, bank statements, and identification. Look for subtle inconsistencies and ensure your verification process is thoroughly documented
- Being explicit with clients about your roles and responsibilities: Clearly outline what you can and cannot do, especially regarding the linking of offset accounts and any post-settlement account management
- Understanding credit assistance: Any time you suggest a client applies for a loan with a lender – even if you are only referring the loan and not lodging it as their broker – the referral is considered credit assistance
Broker-engagement data from Connective’s recent compliance webinar suggest brokers are aware of the risks and are adapting accordingly.
Of the more than 600 attendees, 76% said they already consider the risk of future complaints in every file they work on. A total of 91% of attendees said they intend to make changes to their approach moving forward in light of new insights provided.
According to Oh, these numbers show brokers are aware of the shifting risk environment and are keen to adapt.
Mortgage broker complaints tiny fraction of a whole
Mortgage broker complaints have consistently represented a small fraction of total complaints received by AFCA, especially since the implementation of the Best Interests Duty following the Banking Royal Commission.
Credit: The Value of Mortgage and Finance Broking 2025 Final Report. | Mortgage & Finance Association of Australia
Data from AFCA show that from 2020 to 2024, complaints levelled against mortgage brokers and aggregators dropped by 40%, while complaints about banks fell by just 2% over the same period.
Notably, complaints against mortgage brokers and aggregators have consistently accounted for less than 1% of all banking and finance complaints each year, despite broker-facilitated home loans increasing to more than 75% of total market share.
In 2024, there were fewer than four complaints per 1,000 brokers.
Raising the bar on mortgage industry standards
The comparatively low number of complaints levelled against mortgage brokers coincides with an increase in the industry’s standards of education.
This year, the MFAA raised the bar even higher with the launch of the Mortgage Finance Professional Australia (MFPA) designation, the first university-level qualification for brokers.
“Over the last 30, 40 years, as broking has grown up, it has become a really integral part to the financial lives of Australians. As regulations evolved and the industry has evolved, we too need to evolve in terms of where standards can go,” Pannek told MPA in a recent interview regarding the MFPA.
The MFPA “clearly demonstrates we're not a set and forget”, Pannek said. “We want to give further pathways to our members… to continue to lift the bar and the professionalism, the trust, the capability of brokers in our industry. I think that's really important. That's a big role of what associations do.”
The commercial side of the broking industry has also upped its education game, with the Commercial & Asset Finance Brokers Association (CAFBA) launching online education platform PACE Premium earlier this year.
