Treasury urged to investigate AFCA ‘coaching’

Amid continuing complaints from advisers that they believe they have witnessed the Australian Financial Complaints Authority (AFCA) “coaching” complainants, the Federal Treasury is under pressure to address the issue.

The concerns about AFCA coaching have been raised in the context of Treasury’s current review of AFCA alongside equal concerns about the manner in which the authority has also been perceived as inappropriately handling complaints from wholesale clients.

The concerns around AFCA coaching became public last year when the authority was censured by the NSW Supreme Court – something which then led to a change in the AFCA rules to address the issue.

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Notwithstanding that rule change, the Financial Planning Association (FPA) has pointed out to Treasury that members have been raising complaints about the coaching by AFCA.

In its submission to Treasury as part of the AFCA review, the FPA said that its members had raised concerns about AFCA “coaching complainants through the EDR process”.

“This is not something we can provide case study evidence on. However, the FPA believe the concerns raised warrant Treasury investigating this issue further,” it said.

The FPA also suggested that “there is a need to assess AFCA’s internal systems and processes to ensure the scheme is performing in a manner consistent with its obligation to be independent and impartial to all parties”.

A dealer group director also told Money Management that he had first-hand experience of the terms of a complaint becoming progressively polished as the complainant had increasingly close contact with AFCA.

The concerns about complainant coaching come at the same time as both the Stockbrokers and Financial Advisers Association (SFAA) and the Association of Financial Advisers (AFA) raised concerns about AFCA’s willingness to deal with complaints from wholesale clients in seeming contravention of the intent of the legislation.

The SFAA submission told Treasury that different provisions in the Corporations Act apply to clients depending on whether they are retail or wholesale.

“For example, wholesale clients are not subject to the statement of advice requirements that retail clients are. Financial advisers who advise wholesale clients are not subject to the FASEA Code of Ethics or education requirements. This is because the Parliament has decided that wholesale clients don’t require the consumer protections that are afforded retail clients,” it said.

“It is not uncommon, however, for a client to suddenly ‘transform’ from a wholesale to a retail client when an investment does not perform as well as was hoped, and for them to lodge a complaint with AFCA to reimburse them for the market risk they took.”




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well the former FPA chairperson runs a business that helps people with claims. I hope that when all is investigated no one is found to be coaching claimants. What chance do advisers really have when they aren't even afforded fair due process. The smart ones are already out of the industry and gone.

AFCA is required to be impartial. The NSW judgement that AFCA coached people shows they are not impartial and is a major issue. This needs to be stopped and any biased cases reviewed.

It’s not just the complaint coaching.
It’s the lack of natural justice.
It’s the extensions of time.
It’s the extensions of $$$ values allowed.
It’s the lack of any complaint costs to clients.
It’s the ability of vexatious clients to never. stop complaining and eventually get a win as AFCA find ways to appease them.
It’s Advisers complete lack of appeal.
It’s AFCA and Choices belief a client should never lose a single $.
It’s a Kangaroo court grown on steroids way beyond its initial intention.
Is any other Industry or Profession open to attack from such a Kangaroo court process ?

One of the reasons I avoid certain clients, cut clients, and nip any issues in the bud before it grows ...I witnessed a staffer from the former FOS service stand before a crowd at an Independent Retirees association meeting actively encouraging people to make a complaint direct to them. The words were similar to "make sure you come straight to us"...there was no mention of the actual process, working it out, speaking with the adviser or licensee. I left with the distinct impression they must also have some sales targets and it was imprinted that if anything ends up there it will be clearly one sided.

yes, as I've mentioned before, the regulators are now a business competitor, their staff are incentivised like any other competitor organisation, and they run for profit, and receive more funding for doing so, allowing fiefdoms to be built, neo con economics gone mad.

That's what happens when the whole advice system is broken, over regulated and with much of the regulation being ambiguous. RIP the old advice world of providing 'appropriate' advice where 90% of advisers did the right things with the other 10% wrecking it for others.

Hrmm... 10 year lookback on all AFCA decisions and refund of all fees plus interest?

I suspect it was Treasury who designed the system? Treasury and ASIC are very good at designing laws which green light Industry Super and provide a armed police enforced road block to all Industry Super competition.

I have first-hand experience when a client complained to AFCA about fund Manager
It was directed to the Licensee of the AR. AFCA completely missed the point.
The Adviser in question was seeing the client who was mortified that her complaint had been misrepresented and sent to the adviser. The client immediately signed a retraction, and the Licensee was still charged for the privilege of dealing with the non-complaint.

Financial advisers should no longer be subject to AFCA at all. Hayne recommended a SINGLE disciplinary body for financial advisers. Instead Hume introduced a FOURTH disciplinary body on top of ASIC, AFCA and Licensees.

It's not a SINGLE disciplinary body until advisers are freed from the unnecessary complexity and costs of AFCA, ASIC and Licensees.

AFCA is absolutely not impartial on advice complaints, not even close, often finding any reason they can to make a licensee pay even if the original complaint does not stand up. The bias towards clients has increased over time. It accelerated when FOS changed to AFCA and in recent times has continued to accelerate.

Advice complaints are far more subjective than superannuation, insurance etc, often he said/she said in nature, and give AFCA more scope to make it up as they go along in terms of what they feel better advice should have been with the benefit of hindsight on investment performance etc.

Taken out insurance several years ago and not needed to claim? Complain to AFCA who will decide you were over insured and get you your money back. Took a higher risk investment strategy which didn't perform well due to market volatility? Complain to AFCA who will absolve you of any duty to read the extensive risk disclosure you received and get you your money back. Call it the AFCA capital guarantee, like other capital guarantees but free (well the advice company pays for it)!

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