Speaking at the Australian Financial Complaints Authority (AFCA) Member Forum on Tuesday, Tim Goss, business lead for the Compensation Scheme of Last Resort (CSLR) project, noted that the CSLR will officially get underway following the Easter long weekend.
“We’re six days away from the Compensation Scheme of Last Resort stores and accepting claims from Australian Financial Services consumers,” Goss said.
“This is a significant milestone for the Australian Financial Services sector.”
He added that the complaints authority is aiming to work through the backlog of complaints related to insolvent firms, which it has been working on since the CSLR legislation passed in June 2023.
“We’ve been pausing complaints at AFCA where a financial firm becomes insolvent for a period of time and at the time of the legislation passing, we had a significant number of complaints that required our action and we’re certainly eager to be able to deal with those matters as quickly as we practically can,” Goss said.
The team dealing with the complaints has also been increased, he said, including the addition of a senior ombudsman specifically dealing with this area.
“At AFCA to support our focus on this important work, we’ve increased our team sizes, both in our case management area as well as our decisionmaker team, so that’s important capacity that we’ve added into our system in order to be effective working our way through this backlog of complaints,” Goss said.
“Importantly as well, we’ve recently appointed a senior ombudsman, Ian Donald, to specialise in CSLR-related complaints within our investments and advice area. It really is the majority space where we’re seeing in scope complaints relating to insolvent financial firms within investments and advice. Ian’s presence within the space to assist our teams with that is a really important step forward for us as well.”
Earlier in the day, chief ombudsman and chief executive officer David Locke also spruiked AFCA’s increased capacity.
“We are prioritising these complaints and have doubled the size of our investments and advice team to accelerate this important work,” Locke said.
According to Shail Singh, lead ombudsman, investments and advice at AFCA, the “lead decision” that was published in February would assist decision making in the more than 1,900 Dixon Advisory complaints it has received to date, adding that AFCA will “ultimately be able to derive efficiencies”.
“There are a number of variations on the theme. You can get situations where someone has a very large portfolio and they’re only investing a small part in Dixon-related matters, the nature of the allegations can be different depending on the particular complaint involved and obviously, their individual circumstances all need to be considered,” Singh said on Tuesday.
“Having said that, I think once we get through the first batch of them, which is in the order of 100 complaints, there will be efficiencies to be derived for the remainder and you’ll see that happening over the next year or two.”
Speaking on the ifa Show podcast last week, the FAAA’s general manager of policy advocacy and standards, Phil Anderson, raised concerns that even with the efforts that AFCA has made to speed up the process, the volume of complaints is simply too high.
Anderson pointed out that the cost will only get higher in financial year 2025–26. Namely, according to estimates drawn up by the Actuaries Institute, AFCA will need until the March quarter of 2026 to complete the processing of legacy Dixon Advisory matters.
“We are talking about the prospect of an even larger number in the financial year 2026,” Anderson said.
“So, this is an issue that we need to argue strongly for, not only this year or the year that’s coming up, but the following year. So, it’s not just about $1,200. It’s probably significantly more in the 2026 year that we certainly want to see the government come to the party on.”
Good to see advisers are paying for Dixon-related matters, even though it was ASIC that didn’t do it’s job in making sure this stuff never happened.