It was good news for advisers in the latest Australian Financial Complaints Authority (AFCA) data for the past year with several areas seeing a decline in complaints volume.
The data, which compiled complaints over the past 12 months to 30 June, showed the number of licensed financial firms with a complaint lodged against them was 5% lower than the previous 12 months at 1,628.
Focusing specifically on complaints in the investment and advice space, several areas saw a significant decline. Complaints about service quality, failure to act in clients’ best interest and inappropriate advice all saw a decline in FY22.
Inappropriate advice complaints saw a particularly large fall with the number more than halving from 534 in FY21 to 241, a 54% decline.
However, there was growth in the number of complaints about failure to follow instructions which rose 44%.
The number of complaints in the sector which were resolved at an early stage were flat on FY21 at 33% and 45% were resolved by agreement.
Given many advisers already feel they are being unfairly targeted by AFCA when it comes to fees, and given the small percentage of complaints against advisers compared to other parts of the financial services industry, the declining figures will be more ammunition for them to argue against fees.
However, just this month, AFCA has introduced a new type of user-pays funding model in light of these concerns. This would see the vast majority of firms see their levy the same or reduced while ‘heavy impact’ firms which receive a high volume of complaints would see their fees reflect that fact.
Submissions to the Quality of Advice Review by advisers have also raised requests for guidance on how cases were judged by AFCA.
Full data and analysis will be released by AFCA in its annual review later this year and no doubt, advisers will be watching to see if the numbers continue to decline and whether financial advice should be exempt from the levy altogether.
