How to put AFCA ‘out of business’
The Australian Financial Complaints Authority (AFCA) has produced a presentation for advisers on key steps with how to avoid the ire of the complaints authority.
The document, which was shared by an adviser to Money Management included the subsection “How to put AFCA out of business” which highlighted the steps advisers should take to give them the best chance to defend themselves against the complaints authority.
It noted that taking detailed file notes, establishing the terms of engagement, and turning away clients when appropriate were the top three key points.
“What does the client want? How much will they pay and for what? Explain what types of services you are providing – general, personal advice and scaled advice (reasonable attempts to obtain information),” the document said.
It said advisers should be turning away clients if the adviser does not offer the appropriate advice, have the requisite expertise or there were communication problems.
Establishing what the client wanted and tailoring advice to that was important. An example was retiring at 65 with an income of $50,000 a year, not just creating wealth or capital security.
It noted it was important to explain the risks to clients, particularly those who want to act against the advice.
Making the statement of advice (SoA) understandable, which included checking for errors, irrelevant references was important. AFCA would also check for a lack of care and diligence or if a cookie cutter SoA was used.
When it came to superannuation switching and self-managed super funds (SMSFs) it would check whether there was a good reason to recommend a switch and whether there was “compelling” reasons to recommend an SMSF.
Finally, it said advisers should not be recommending products to their clients if they client did not understand it.
Advisers had done well with the complaints authority and made up only 1% of total complaints, which had continued its downward trend this financial year.
AUTHOR
Chris Dastoor
Recommended for you
A quarter of advisers who commenced on the FAR within the last two years have already switched licensees or practices, adding validity to practice owners’ professional year (PY) concerns.
Integrated wealth and financial services group Rethink has launched a financial planning arm called Rethink Wealth to expand beyond property investing and into holistic wealth management.
While adviser numbers continue to slowly creep back up, the latest Wealth Data analysis reveals they would actually be in the green for the calendar year if it weren’t for so many losses in the limited advice space.
Iress has appointed a chief AI officer to spearhead the fintech’s strategic focus on AI, with chief executive Marcus Price describing how the technology opens the doors to a “new frontier for wealth advice”.
