The investments banks made in systems to manage loan repayment deferrals and other forbearance measures during the first two years of COVID have resulted in a permanent improvement in the way customer hardship notifications and disputes are handled.

The chief executive of the Australian Financial Complaints Authority, David Locke, said that when AFCA was launched in 2018, 40 per cent of matters were resolved by banks before going to external dispute resolution. Now 65 to 70 per cent of matters are resolved by banks.

Speaking at an Australian Banking Association conference on Friday, Locke said banks were doing a better job of resolving disputes in the initial stage because of the investment they have made in their internal dispute resolution processes.

“We also see more senior management engaged with this issue.” Locke said.

He said the improvement was not industry-wide and some financial institutions have gone backwards over the past couple of years, but overall things had improved.

He said the banks did “an astonishing job” helping their customers through the COVID lockdowns. AFCA saw a 40 per cent drop in financial difficulty cases during that period.

Locke was part of a panel discussing what would happen to complaints and hardship numbers coming out of the pandemic.

Barrenjoey chief economist Jo Masters said households were in good shape, with low unemployment, rising household wealth and high savings levels.

She said one question was whether the higher savings are held by the households most exposed to rising cost of living pressure.

“We do see some data that suggests households across all income quintiles saved money,” Masters said.