Advisers unlikely to be ruled against in ‘know your client’ complaint

There were over 2,700 complaints received by the Australian Financial Complaints Authority (AFCA related to ‘know your client’ issues since its inception in November 2018, but just 3% of the 2,252 resolved were ruled in favour of the complainant.

According to AFCA data, it had received 2,788 issues relating to inappropriate advice or failure to act in client’s best interest, those ‘know your client’ issues. This was out of a total of 11,355 complaints related to investment and advice.

However, of the 2,252 that had been closed, some 40% were resolved by agreement at an early stage and 24% ‘went no further’.

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Only 15%, some 333, went onto to be ruled in favour of the complainant at the preliminary assessment or final determination phase.

Natalie Cameron, lead ombudsman for investments and advice, said: “The average adviser has little chance of ever having an AFCA decision against them.

“At AFCA, we take every opportunity to secure a resolution that’s fair for both parties. If we can bring the parties together so they reach agreement themselves, then that’s the ideal outcome for us.”

Nevertheless, there were still ways that advisers could strengthen their service and prevent receiving a ‘know your client’ complaint. These included documents tailored to a client’s financial literacy such as clear statements of advice (SoA) that didn’t contain pro-forma jargon or excessive irrelevant material.

Providing documents to AFCA that were created at the same time as the advice was given also “carried more weight” in the event of a complaint.

Shail Singh, senior ombudsman for investments and advice, said: “It’s difficult for us to be convinced an adviser has selected the right strategies and financial products for a client, or even if they have, that they have adequately conveyed this to a client if documents contain pro forma jargon, complex concepts or excessive amounts of irrelevant material”.


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You would think that providing a legally compliant advice document would be enough to cover your bum. But no, AFCA have their own invented standard which is subject to change at any time. This is why SOAs should never be less than 100 pages of disclaimers. This is why advice is unaffordable.

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