The Australian Financial Complaints Authority (AFCA) has recorded its biggest year ever for consumer and small business complaints and claims performance is now the single most complained-about issue in the entire financial system.
The financial services ombudsman received 111,373 complaints in the 2025 calendar year, a 14% increase on 2024 and the highest annual volume in AFCA’s history. Consumers and small business owners also secured a record $643 million in compensation and refunds through AFCA, up 120% year-on-year — a sign of rising dispute volumes and the financial stakes involved when matters escalate beyond internal dispute resolution.
For the insurance industry, the most concerning datapoint sits at the top of AFCA’s issues list: delay in claim handling was the most complained about issue across financial services, with 9,274 complaints. That was followed by a steep surge in misleading product or service information (8,457 complaints, up 110%), while denial of claim ranked fourth — and is accelerating quickly, rising to 6,362 complaints, up 32% in 2025.
AFCA's chief ombudsman and CEO David Locke (pictured) said the numbers are a warning shot for a sector in the middle of major reform. “This data highlights the sustained demand for our service,” Locke said, adding that with a new Banking Code in force and “major reforms underway across general and life insurance”, the system is at “a pivotal moment… to lift standards and deliver more consistent, accessible and customer focused outcomes”.
Among the five most complained-about products in 2025 were motor vehicle insurance (12,879 complaints, up 18%) and home building insurance (7,359 complaints, up 3%) — categories where claims cycles, repair supply chains, catastrophe activity, underinsurance and customer expectations collide.
The escalation in denial-of-claim disputes, in particular, will be read closely by claims leaders, underwriting teams and intermediaries. Complaint volumes don’t automatically prove poor decision-making — denials are sometimes correct and unavoidable — but the pace of growth suggests consumers are increasingly unwilling to accept decisions without challenge, and more likely to test the robustness of policy wording, evidence requirements, communication quality and dispute pathways.
In a speech to industry lead ombudsman for investments and advice Shail Singh said 2025 was “AFCA’s busiest calendar year on record”, describing an environment shaped by “enormous demand” and growing complexity.
He said general insurance complaints jumped to around 36,000, up 20%, while life insurance complaints rose 13%. Those increases, alongside the system-wide ranking of claims delays and claim denials, underscore that the pressure points are not confined to one line of business — they sit across the end-to-end claims experience, from first notification and evidence collection to assessments, third-party interactions and the clarity of final decisions.
Singh said AFCA’s “top issues tell their own story”: delays in claims handling; misleading information; denial of claims; fees and charges and service quality issues. For insurance, that combination is particularly challenging because it straddles both operational execution (cycle times, resourcing, triage, external dependencies) and customer understanding (what is covered, what is excluded, and how decisions are explained).
AFCA’s message lands as the sector faces heightened expectations on fairness and transparency — and as intermediaries are increasingly pulled into the claims experience, whether they want to be or not. For brokers, the numbers will sharpen focus on client education at placement and renewal, documentation discipline, and proactive claims advocacy. For insurers, they point to the fundamentals: invest in claims capability, remove avoidable friction, communicate early and often, and ensure decisions are both technically correct and clearly explained in plain language.
Beyond insurance, AFCA said complaint growth in 2025 was spread across all product areas, including banking and finance, superannuation, and investments and advice. Large-scale collapses in the advice sector helped drive a 58% increase in investment and advice complaints, including matters linked to the Shield and First Guardian Master Funds, which AFCA said will remain a focus through 2026.
