AFCA observes ‘sophisticated’ scam activity coming up in super

1 August 2024

| By Rhea Nath |

The Australian Financial Complaints Authority (AFCA) has noted instances of sophisticated scam activity in the superannuation sector amid a record number of complaints in the last financial year.

The 2023–24 financial year saw another record number of financial complaints filed to the external dispute resolution body.

More than 105,400 disputes were received, marking a 9 per cent rise from the 96,987 complaints made in FY22–23, though this increase was notably less than the unprecedented 34 per cent surge during FY22–23.

“While we haven’t seen the scale of increase we experienced a year ago, these record numbers are still too high,” said David Locke, AFCA chief ombudsman and CEO.

VIEW ALL

View all

“We are disappointed we haven’t seen a reduction. Our view is that firms could be resolving more complaints themselves or preventing them in the first place.

“We continue to take steps to be able to keep up with the increasing demand for our service, but it’s in everyone’s interests that rising complaints are tackled at the source.”

The preliminary data snapshot showed scams were a key driver, with scam-related complaints averaging 913 a month, up from 504 a month in the previous financial year.

At 10,951, scam complaints rose 81 per cent over the last financial year.

In comparison, banking and finance complaints rose 11 per cent to 59,636 and general insurance complaints 4 per cent to 29,096, as at 30 June.

Looking at scam-related complaints, the chief ombudsman added that AFCA has started to see instances of sophisticated scam activity in the superannuation sector.

“We urge super fund trustees to review the steps they have in place to protect members from fraud,” he said.

“The fact that scam and unauthorised transaction complaints in super are still low means there’s a window of opportunity for trustees to act so we don’t experience the sorts of issues seen elsewhere.”

Earlier this year, Aware Super identified a 208 per cent increase in attempted financial crime from ‘brazen’ cyber criminals targeting the fund’s members in the six months to March 2024.

According to the fund’s chief operating officer, Jo Brennan, the careful monitoring of systems was able to prevent the loss of more than $36 million in member savings.

“For any financial services organisation the reality is that we will always be a target,” Brennan said.

She noted that, compared to breaches of traditional bank accounts, superannuation hacking could prove to be more devastating for many Australians.

“With super accounts often representing decades of hard-earned savings, the impact of losing even a fraction of retirement funds could result in needing to re-enter the workforce, or sell off assets such as homes to help fund retirement,” Brennan said.

“It’s rare that the average Australian will have a hundred thousand dollars sitting in their everyday banking account, yet when it comes to super it’s these sorts of amounts that we’re talking about – and more.

“Financial criminals know this, and that people don’t regularly check their super balance, which is why we’ve seen such a steep rise in financial crimes targeting superannuation.”

AUTHOR

Rhea Nath

Rhea L Nath is a journalist on Super Review and InvestorDaily, with a focus on funds management, superannuation, and institutional investment. Previously, she covered small business and entrepreneurship news at Dynamic Business and multicultural issues at Indian Link Media Group. In 2022, she was named Young Journalist of the Year at the NSW Premier’s Multicultural Communications Awards.

View articles by Rhea