On the same day the Financial Planning Association of Australia (FPA) and the Association of Financial Advisers (AFA) headed up Parliament to garner sympathy over regulatory fees, the Australian Financial Complaints Authority (AFCA) has praised the advice industry for its lack of complaints.
Natalie Cameron, AFCA lead ombudsman – investments and advice, said: “That’s not to say we don’t have the odd egregious breach and failure, but by and large I would applaud the industry for maintaining a relatively slim number of complaints that are coming in”.
AFCA data showed that 3,898 complaints were received for investments and advice, but for adviser specific complaints only 1,238 were received with 964 being closed.
Money Management previously reported AFCA numbers that showed advisers made up a fraction of complaints and which was also the case for the year to 30 June, 2021.
AFCA confirmed that out of all complaints, only 1.8% were advice complaints, with $23.6 million in compensation awarded which amounted to an average of $20,000 per claim.
Shail Singh, AFCA ombudsman, said it was no surprise and it was line with previous trends with not a high number of complaints at all.
“Approximately 11% of members have had complaints against them which means the vast majority of members do not,” Singh said.
Cameron said: “$23.6 million paid across the year is a lot of money for consumers affected and a lot of money that’s needed to be paid, but probably also not likely to bring down the professional indemnity insurance industry as has sometimes been suggested, hopefully we will see those figures reduced over next year as well”.
For product-related complaints, shares had the most complaints with 950, followed by foreign exchange (431), contracts for difference (417), superannuation fund (302), and self-managed super fund (272).
By issue, service quality (674) had the most complaints, followed by inappropriate advice (534), failure to act in client’s best interests (525), incorrect fees/cost (331), and failure to follow instructions/agreement (229).
Singh said: “Interestingly 950 [complaints] relate to shares, so that’s in terms of general or personal advice of share recommendations, as an example.
“Service tends to be a big [complaint area] but no surprise as well that inappropriate advice and failure to act in best interest amount to about 1,000 in total, that is to do with some historical disputes but essentially the same issue.
“Incorrect fees and costs, failure to follow instructions and agreements – a lot of those relate to foreign exchange and contracts for difference providers.”
