AFCA panel's $30,000 lookback fee

The Australian Financial Complaints Authority (AFCA) charged nearly $30,000 for a panel considering an old complaint in the wake of the Federal Government allowing complaints lookbacks to 2008.

As well, significant concern has been expressed over the manner in which AFCA has moved into hearing what would be regarded as “wholesale client” complaints.

The Association of Financial Advisers (AFA) has told the Federal Treasury about the financial advice community’s concern about the Government’s decision in February, 2019, to allow AFCA to consider complaints going back to 2008 for a 12 month period from 1 July, that year.

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“This was extending the timeframe back to a point beyond where it was mandatory to retain files, and licensees could be forced to defend matters for which they no longer held the records,” the AFA said in a submission.

“This was a decision of Government, however it had a broad impact. We have recently become aware of the fees that AFCA were charging for considering these older complaints, where a decision by a panel, for a complex matter, could cost $29,860,” it said.

“Whilst this is not a matter that impacts our members, who predominantly operate in the personal advice to retail clients space, we have also become aware that there is a genuine issue with respect to how AFCA has become an attractive option for wholesale clients.”

“This seems inconsistent with the intent,” the AFA submission said.

“The origins of external dispute resolution (EDR) schemes was a mechanism for consumers to seek redress with respect to less material matters, in a manner where it was not necessary to seek the support of lawyers. The limits and caps have risen significantly since that time. Seemingly the current model is very different to where this originated,” it said.

“The much higher limits and the model that is strongly biased in favour of clients has a very big impact on the Professional Indemnity (PI) Insurance market for financial advice, and PI Insurance is of course mandatory.

“Premiums have been rising rapidly in recent years and there are serious concerns about this market going forward. AFCA is an important factor in the considerations of PI Insurers. This adds to the rapidly rising cost of financial advice and the reduction in access and affordability of financial advice.”

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BS Bureaucratic REGS madness at every turn.
The system is entirely broken, by Pollies, ASIC and a mad Left Wing Loonie belief that Investing can never result in a loss for a client.
Fundamentally a crazy Choice / ASIC /AFCA led approach that defies the whole ethos of taking on Risk when investing.
Great job LNP turning yourself into a bunch of Left Wing Loonies controlled by the likes of Choice, ASIC, AFCA, FARSEA, ATO.
Let’s make Advice more Affordable - bah huh huh huh WHAT AN ABSOLUTE LOAD OF CRAP! LIES COMPLETE LIES FROM CANBERRA, every few weeks there is more Red Tape costs, more useless REGS, more Advisers forced out of business and more clients that can’t afford Advice.

unfortunately the woke left wing media led by the ABC smash the LNP on this at every turn, and SCOMO didnt have the inner trump to tell them to get stuffed. He is way too nice.

If Hume implemented Hayne's recommendation for a SINGLE Disciplinary Body then financial advisers would no longer be subject to AFCA. Less than 2% of AFCA complaints are about financial advisers, but AFCA causes increased complexity and cost of all licensed financial advice. AFCA actually makes it harder for consumers to access professional advice.

AFCA should only be for product providers. Hume is a liar if she says financial advisers have a SINGLE Disciplinary Body, while they are still subject to AFCA as well.

Finally some heat coming on AFCA. Its a shame every has stayed so quiet for the last 2 years (not that FOS was much worse). However its hard to find a government/stat body in Aus that is essentially lawless. AFCA can freely say we only use the law as a guide, we can decide anything we want. Glad they also raised the WHOLESALE issue. AFCA are very proud saying we felt this person wasnt sophisticated enough to wholesale despite the valid Acc Certificate.
They should come out with all the extradordinary costs of AFCA case fees. $8500 case fee for a case dismissed at the final leg by AFCA on someone complaining about rising premiums on Life policy held for 25 years. They are still so proud of themselves.

Another nail in the coffin. No doubt for some, it will be time to send the resume into AwareSuper, and practice my phone answering skills and salary sacrificing sales techniques.

And the cost of PI insurance just keeps going up. Just got the renewal today and it's thanks for a 53% increase in 2 years with no claims, to go with the 160% increase in the ASIC fee.
Throw that on top of every government department known to man sticking their hand out for another fee to cover nothing and they wonder why we all have to keep putting our fees up. It won't be long until minimum plan fees are $5,000. Why would anyone new even consider joining this profession?

I've been saying for ages that the financial planning/advice industry is all but dead... The only question is whether it will be the government regulations or the cost of PI cover that will be the last nail in the coffin...

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