Advisers should not be relied on to fund the compensation scheme of last result, as Australian Financial Complaints Authority (AFCA) data showed advisers comprised a fraction of complaints, according to the Association of Independently Owned Financial Professionals (AIOFP).
AFCA confirmed to the AIOFP that for the 2020/21 year, 997 complaints were received relating to advice, which was just over 1% of complaints received by AFCA for that year.
Of those complaints, 974 were resolved and a total of $20,447,731 was either awarded or obtained through AFCA, with the average compensation per complaint being around $20,000.
Peter Johnston, AIOFP executive director, said he wanted funding for the CSLR to act in the best interests of consumers by separating advice from product and called on the Government to fund it appropriately.
“Both [advice and product] were forcibly intertwined in the early 1990’s when the banks established their vertically integrated models – code for in-house advisers selling in-house products – an unfortunate event for consumers and the industry in general,” Johnston said.
“There is ample evidence that Commissioner Hayne, the Australian Labor Party and Coalition politicians wanted to commence the scheme from 1 January, 2008.
“Please consider that a disproportionate ratio of funding allocated to advisers will be passed directly back to their clients – putting affordability of advice even further out of reach for consumers.
“Product failure is the big-ticket item for consumer losses over the past 40 years – as we explained to the Senate last Friday, this is the domain of ASIC and the institutions for responsibility, not advisers.”