Latest advice complaints data shows 'rapid professionalisation' of sector

The latest data released by the Australian Financial Complaints Authority (AFCA) last week looked at the number of complaints lodged by Australians reaching AFCA between 2021-22. Relating to financial advice complaints, 610 complaints were received out of a total 2,078 (relating to all investment and advice complaints).

As noted by the FPA, a reduction of complaints related specifically to financial advice has dropped 50 per cent from the last financial year when 1,238 complaints were received. The recent data from AFCA revealed that complaints related to financial advice now only represent 0.8 per cent of all complaints.

Further findings revealed that 672 financial advice complaints were closed over the same period, with 110 (16 per cent) being closed during the registration and referral stage of the process, 235 (35 per cent) were resolved via agreement between client and adviser, and 50 per cent were resolved in favour of the planner at the determination stage.

FPA CEO Sarah Abood said this week that the latest figures are a “positive development” for the financial planning profession.

“It is encouraging to see a fall in the number of complaints which highlights the ongoing professionalism of financial planners right across the country,” Ms Abood said. 

“Not only are the absolute numbers of complaints falling, but in many cases, complaints are being resolved in the planner’s favour.”

According to Ms Abood, the design and implementation of the Compensation Scheme of Last Resort (CSLR) — which aims to provide limited compensation where a determination issued by AFCA that relates to a financial product or service remains unpaid — should ensure that consumers are “covered for the full range of matters considered by AFCA”, which includes managed investment schemes.

Ms Abood added that the government should “bear the costs of the establishment and any legacy claims” related to the scheme.

“The administration costs of a CSLR should be closely monitored to ensure that cost recovery from industry primarily compensates consumers rather than covering bureaucracy and administration,” Ms Abood said.

The top five complaints received were in relation to the interpretation of product terms and conditions (a new entry to the top five), service quality, failure to follow instructions/agreement, failure to act in client’s best interest and inappropriate advice, totalling to 2,078 complaints lodged in 2022, from 2,062 in the previous year.