The delayed legislation to establish a compensation scheme of last resort (CSLR) has led to a pause in a “significant number” of investments and advice complaints over the year to 30 June, 2021, according to the complaints authority.
According to the Australian Financial Complaints Authority (AFCA) annual review, it said the pause was due to the insolvency of the financial firm and/or failure to pay compensation in accordance with an AFCA determination.
It noted that were also a significant number of cases delayed during the year while it reviewed its jurisdiction following the supreme court DH Flinders v AFCA decision.
The annual review also found investments and financial advice accounted for 6% of the total complaints made with the most complaints regarding financial advisers/planners at 748.
Advisers/planners were followed by foreign exchange dealers (572) and derivatives dealers (469).
Over the year, there were 3,888 complaints related to investments and advice and advisers/planners which made up 1% of the total complaints (70,510) received by AFCA during the year.
The top issues raised were service quality (674), inappropriate advice (534), failure to act in the client’s best interests (525), incorrect fees/costs (331), and failure to follow instructions/agreement (229).
“Advice that is inappropriate, or not in the client’s best interests, is, by far, the biggest issue in the investments and advice area,” AFCA said.
Shares (950), foreign exchange (431), contracts for difference (417), superannuation fund (302), and self-managed superannuation fund (272) were the most complained about products.
Over half of complaints were closed within 180 days with 15% closes within 181 to 365 days, and 5% over 365 days.