It doesn’t happen often, but it does happen. Kate Kachor outlines what to do when your client makes a complaint.
Financial advisers who receive complaints, no matter how small, must sit up and take notice. That’s the message from Financial Industry Complaints Service (FICS) chief executive officer and adjudicator Paul Bean.
Bean has been with FICS, an independent regulator for the financial services sector, for the past seven years and says advisers and dealer groups who ignore minor complaints are making a serious mistake.
“It is important that people always consider a complaint to be serious. Don’t reject a complaint out of hand,” he says.
From 1995 to 1998 the Financial Planning Association (FPA) handled industry complaints through its financial services compliance resolution scheme.
In 1998, however, the federal government introduced regulations requiring all licensees to have a complaints handling system. The Australian Securities and Investment Commission (ASIC) produced a guideline as to what it means for policy and on January 1 last year the FPA merged its financial services compliance resolution scheme with FICS.
Bean says the most common financial planning complaints are from clients who haven’t received a financial plan and clients who believe their planner has given inappropriate advice.
FICS resolves around 90 per cent of complaints at a case management level.
Even though FICS is an independent organisation, like the courts there are certain issues that are outside its jurisdiction.
“If it’s a commercial matter we won’t deal with it,” says Bean. “It has to be in relation to shares or an advice issue.”
Bean says that while there are particular steps that need to be taken when a client makes a complaint, the important thing is not to panic.
“When an adviser gets a complaint against them, at least two people should look at the complaint. These people can be accountants or lawyers or another dealer group,” he says.
Once the client has made contact with the dealer, the dealer has 45 days to deal with the complaint. If the complaint has not been resolved after the 45 days, the dealer passes the complaint to one of FICS’s investigators, who will ask for documents or any written submissions regarding the complaint.
The job of the investigator is to reach a conclusion about the complaint.
Complaints under $10,000 are passed to an adjudication committee. Complaints over $10,000 are passed to a panel headed by a supreme court judge, a consumer representative and an industry representative.
Neither parties are present when a ruling is given. The committees determine the ruling based on the respective written submissions.
Bean says the decision the panel makes is binding on the member but not on the consumer.
“The panel outcome it is not appealable, as there is a supreme court judge presiding.”
Panel members are appointed for two years and include a representative from the FPA.
FPA head of Professional Standards, Ken Breakspear says members of the FPA and licensees are obligated to cooperate with FICS. If a member fails to comply with industry regulations then the FPA can investigate the conduct, and if necessary sanctions may be placed against the member.
“Once the consumer redress has been looked at through the FICS mechanism, then a complaint can come to the FPA for consideration as a professional standards matter,” he says. “We look to see if there are breaches of professional conduct on the part of the financial planner or the financial planning firm.”
Breakspear says that if there has been a breach of conduct, the FPA may take certain steps of correction which may include the member’s misconduct being publicly known.
“If there is a systemic weakness in standards or the quality of advice being given then we might ascertain that an improvement in training or the introduction of the guideline might be appropriate so that members don’t make the same mistake,” he says.
