The Australian Financial Complaints Authority said complainants received about $254 million in compensation, but this was after a 27 per cent increase in complaints against banking and finance companies and a 50 per cent rise in complaints about insurance.

Scam-related complaints were up 46 per cent.

AFCA’s Chief Ombudsman and chief executive officer David Locke said the rise reflected growing financial stress in the community, the continued scourge of scams, and issues with insurer claims handling that had continued for more than a year.

“We are deeply concerned by the volume of complaints consumers are having to escalate to AFCA,” he said.

“It’s not fair on consumers and not good for business. We need to see a significant improvement from firms.”

He said the impact of financial stress from rising interest rates and costs of living became increasingly evident in complaints in the final quarter of 2022-23.

Buy now pay later (BNPL) complaints rose 57 per cent in 2022-23 as people turned to other forms of credit to manage tight budgets.

Personal transaction accounts overtook credit cards as the most complained about product, with disputes up 86 per cent. It is the first time credit cards have failed to top the list since AFCA’s inception nearly five years ago.

Consumer advocate Choice said the industry was not doing enough to help consumers.

Choice chief executive Alan Kirkland said that as cost of living pressures increased, more people were at risk of falling into financial hardship as a result of poor lending practices.

“Buy now, pay later loans don’t come with the same protections as other forms of credit, leading a growing number of people to end up with multiple buy now, pay later debts that they struggle to repay,” Kirkland said.