The Australian Financial Complaints Authority (AFCA) is investigating 85 systemic issues across the financial services sector and has identified 16 breaches that are potentially "serious contraventions".

Key points: Misleading conduct, processing errors and poor complaints handling are among the potentially systemic issues identified

Misleading conduct, processing errors and poor complaints handling are among the potentially systemic issues identified The authority said 67 per cent of all complaints received related to the four major banks

The authority said 67 per cent of all complaints received related to the four major banks Less than a year at it was established, the watchdog has received more than 35,000 complaints

As it deals with a deluge of complaints stemming from last year's financial services royal commission, AFCA says the potentially systemic issues include misleading conduct, processing errors, poor complaints handling and the conduct of employees.

In its first six-month report, the AFCA did not name specific institutions or companies but said 67 per cent of all complaints received related to the four major banks, which were condemned for cultural problems in Kenneth Hayne's final report released in February.

The top complaints to AFCA related to credit cards, home loans, credit reporting, unauthorised transactions, misleading information, responsible lending and incorrect fees.

Chief ombudsman David Locke told the ABC's AM program that the surge in complaints highlights cultural and trust issues in the wake of the royal commission.

"We have a bird's-eye view of what's going on right across the sector. It shows that there are still some real issues," he said.

"A large proportion of our complaints relate to the banks with 67 per cent with the four largest banks. The change that's needed is not just resolving individual complaints, but seeing these very much as a canary in the coal mine.

"Where criminal misconduct is found, then I hope prosecutions are pursued and that appropriate action is taken."

Mr Locke said that while AFCA was not a regulator, the authority had "a significant role to play in rebuilding trust in the Australian financial services sector".

"The royal commission shone a bright and forensic light over the financial services sector revealing systemic failings," Mr Locke said.

"AFCA stands firmly on the side of fairness.

"We want to be loud and clear at calling out bad practices and unfair treatment."

Since being established last November as a national ombudsman service, AFCA said it had received 35,263 complaints, a 35 per cent increase on the combined average of previous state financial ombudsman schemes.

AFCA is now expecting to be inundated with 80,000 complaints in the financial watchdog's first year, which is more than 25 per cent higher than initial forecasts.

The expansion of AFCA's jurisdiction to accept complaints dating back more than a decade to January 2008 is expected to add to the surge.

The AFCA said 61 percent of the total complaints it received were related to banking and finance. ( ABC Adelaide: Brett Williamson )

"Australian consumers and small businesses who have suffered from misconduct by financial firms but have not yet been heard will be able to take their cases to AFCA and have them considered," the report said.

"This is a positive step which means many more people will able to get access to justice and have their matters properly considered."

The report said that, despite being inundated in its first six months, 60 per cent of complaints had already been resolved with settlements of $83 million paid to consumers and small businesses.

Major banks have been in constant damage control in the wake of the royal commission and have been working to resolve cultural issues central to misconduct aware as potentially criminal misconduct continues to be investigated by regulators.

Last week, the prudential regulator APRA told three major banks — ANZ, Westpac and NAB — to put aside a $500 million each in additional risk capital until they properly compensate customers for dodgy practices revealed in the banking royal commission.

The Australian Securities and Investments Commission also moved to out 11 major banks for the hard-selling of often worthless credit insurance that rips off consumers.

ASIC threatened to take what it called "significant enforcement" against lenders who pushed what is known as "junk" insurance, where customers might receive just 11 cents from every dollar of premiums paid.

Banking and finance complaints made up 61 per cent of the total complaints to AFCA, followed by general insurance (23 per cent), superannuation (9 per cent), investments and advice (9 per cent) and life insurance (2 per cent).

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