The Financial Counsellors Association of WA has warned that services that charge fees to lodge complaints with banks and the financial ombudsman on behalf of customers are not necessary.

Melanie Hopkinson, the association's chief executive, said services had sprung up that work on a "no win, no fee" basis, taking up to 40 per cent of any payout a complainant might receive.

"They offer to take the fight to the ombudsman for you," Ms Hopkinson told Nadia Mitsopoulos on ABC Radio Perth.


"That could be for a complaint against a financial provider for junk insurance.

Ms Hopkinson said she wanted the public to understand that financial counsellors will do the same for the clients — free of charge.

She said the complaint process to the Australian Financial Complaints Authority (AFCA) was designed to make it easy for people to lodge complaints on their own.

"What we want people to focus on is that there are free alternatives out there," she said."And then if you do get your compensation, 100 per cent of it will go to you."


Commissions could take bite out of compensation

In a statement, a spokesperson for AFCA said it was free to use, and the service was designed so that people did not need to engage a paid representative.

AFCA also said that any compensation awarded would not take into account whether a consumer had used a paid service to lodge their complaint.

"By coming directly to us, you get to keep every cent of any compensation you are owed," the spokesperson said.

"That said, if someone decides to use a paid representative, we'd encourage them to ensure the paid representative makes a detailed submission to the financial firm first, through the firm's own complaints process — more formally known as internal dispute resolution.

"This can be the fastest way of achieving an early resolution."


Services offer to do 'heavy lifting'

One of these paid services is Perth-based website EquiClaim, which offers to help consumers with complaints against banks and takes 40 per cent of any compensation awarded.

"We're addressing the gaps in the system for those who are left behind," EquiClaim director Ronald Ng said.

"And we fully understand that there are other pathways so that you can do it yourself. If you do qualify, you can go and talk to financial counsellors, or you can talk to legal aid, or you can talk to other advisers."

Mr Ng defended the 40 per cent fee, saying his company did the "heavy lifting" for its customers.

"We've looked at the marketplace … and [the fee] mirrors the litigation funding [model], which has been in place for a fair while," he said.

"We're a private organisation, so we don't get the funding that some of the other organisations will get that are government-funded or some of the not-for-profits."


Stigma in asking for help

Ms Hopkinson said many people were unaware that free financial counselling services existed, and for some, there might be an element of shame in asking for help with money problems.

"I think for some people, there is no awareness that the free services exist," Ms Hopkinson said.

"And I also think people get overwhelmed by the prospect of thinking there's going to be an awful lot involved."

Ms Hopkinson said there were about 150 counsellors in Western Australia, and people could contact the National Debt Helpline to be connected to one.

Written by Emma Wynne, ABC News.