The Financial Planning Association of Australia (FPA) has welcomed the announcement by the Australian Financial Complaints Authority (AFCA) about proposed changes to its funding model.
FPA chief executive, Sarah Abood, said the new proposed model would significantly reduce the cost for FPA members in managing external complaints.
“The FPA has been a strong advocate for simplifying the AFCA fee structure for financial planners and we welcome these proposed changes,” Abood said.
“They will provide important cost relief to almost all of our members by simplifying and reducing the existing membership pricing and fees.”
In its 2021 submission to the Treasury review of AFCA, the FPA questioned AFCA’s funding and fee structure, particularly when applied to small businesses and sole practitioners.
It also outlined its concerns about firms incurring high fees and reputational damage from frivolous, vexatious and malicious complaints being allowed to progress through AFCA’s external dispute resolution (EDR) process on the request of the complainant rather than based on the merit of the complaint.
“The proposed AFCA funding model will help address these issues in a number of ways,” Abood said.
“The existing complex tiered annual membership pricing will be reduced to a flat $375. The complicated case fees model with 17 fee categories will be simplified into seven fee categories – and all at lower prices than currently charged. And importantly, AFCA will not charge member firms for the first five cases which go through their processes irrespective of which stage of the AFCA process the cases finish at.
“In the financial planning and investment sector (which AFCA bundle together for reporting purposes), only 4% of firms go above five cases in a year and the FPA understands they are mainly in the investment area or impact very large advice licensees.
“Therefore, members are very unlikely to pay more than the annual membership fee going forward in AFCA fees. This is a good outcome for FPA members.”
