Investments and advice had just one systemic issue reported to the regulators in the second half of FY24, down from three in the six months prior.
In its biannual Systemic Issues Insights Report for Q3 and Q4 of FY24, the Australian Financial Complaints Authority (AFCA) conducted 114 detailed systemic issues investigations and resolved 35 systemic issues with financial firms.
A total of 48 systemic issues were reported by AFCA to regulators, such as ASIC or APRA, in the second half of FY24.
When broken down by industry sector, just one of the 48 systemic issues reported was in relation to investments and advice. This was down from three in the first half of FY24.
In the second half of FY24, banking and finance accounted for half of the overall systemic issues reported by AFCA to regulators at 24 out of 48, while general insurance followed at 17. There were five systemic issues in relation to superannuation and one for life insurance.
The common systemic issue seen in the investments and advice sector, as highlighted by the report, was regarding a settlement agreement being inconsistent with AFCA’s approach.
“A financial firm was using a deed of release to settle AFCA complaints. The terms of the deed appeared to be unfair because they were unreasonably wide and beyond the scope of the AFCA complaints,” the report wrote.
AFCA said it reported the concerns to ASIC in line with its obligations and investigated the matter further by engaging with the financial firm.
The low number of systemic issues relating to investments and advice follows after AFCA reported a 26 per cent drop in investment and advice complaints to 3,559 for FY24 compared to 4,840 in FY23.
Overall sector complaints, excluding Dixon Advisory and Superannuation Services (DASS), fell to an all-time low of 2,709 complaints, which AFCA said reflected greater professionalism of the sector.
“Excluding complaints about Dixon Advisory and Superannuation Services, investment and advice complaints reached an all-time low at 2,709 complaints. This reflects the positive impact of enhanced education standards and increased professionalism within the industry, leading to fewer disputes.”
Dixon’s membership of AFCA ceased in June 2024, preventing any new complaints being filed against the provider.
While complaints decreased overall, inappropriate advice remained the most complained about issue and accounted for 706 complaints. This was substantially lower than the 1,662 inappropriate advice complaints received in the previous financial year.
In late October, AFCA also revealed to Money Management that as of 29 October, it had closed 128 DASS complaints received since AFCA’s inception on 1 November 2018. These closures include 91 determinations. This figure represents 4.6 per cent of the total 2,773 Dixon complaints it will be working through.
