Inappropriate advice complaints to AFCA jump 589%
Two investment firms have made up almost half of investment and advice complaints to the Australian Financial Complaints Authority (AFCA) reports, a rise of 50 per cent in these types of complaints.
In its annual report for FY2022–23, the organisation said the number of investment and advice complaints have risen from 3,207 to 4,840, a rise of 50 per cent.
Almost half (49 per cent) of the total complaints are related to two unnamed financial firms. If these firms are excluded, AFCA said the number of investment and advice complaints will be 2,466, which is 22 per cent lower than in the previous year and continues a downward trend in complaints.
There is a significant jump in the number of complaints received about inappropriate advice, rising from 241 to 1,662, a rise of 589 per cent.
This is followed by complaints about failure to follow instructions, which increased from 332 to 951, a rise of 186 per cent.
However, if the two firms previously mentioned are excluded, the top issue raised by complainants will be service quality.
Some 38 per cent of complaints are resolved at the registration and referral stage, up from 33 per cent in the previous year. The average time taken to close an investment and advice complaint is 112 days, up slightly from 106 days.
AFCA has also updated on the Compensation Scheme of Last Resort (CSLR), which passed Parliament on 22 June 2023, and will facilitate payments of up to $150,000 to eligible consumers who have received an AFCA determination awarding compensation in certain types of complaints but where no payment has been made.
The government is intending that consumers will be able to lodge claims against the scheme from April 2024.
While the government is consulting on the CSLR, AFCA has paused complaints from April 2020. It is said to have commenced reviewing nearly 5,000 complaints that have been on pause to determine their eligibility.
As of 30 June 2023, AFCA has 4,905 open complaints involving 57 financial firms impacted by insolvency.
Almost 2,000 of these (1,992) are related to financial advisers and planners across 20 firms, the highest proportion of complaints, and the majority of these are related to issues occurring at Evans Dixon.
The total claim amount for paused complaints about financial advisers and planners is over $378 million.
AUTHOR
Laura Dew
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