AFCA’s first six months saw it receive more than 35,000 complaints, 35 per cent more than the combined average of its predecessors, as documented its first Six month report.
The body received 35,263 complaints in total during the period, 60 per cent of which were resolved and 74 per cent of them being resolved by agreement or in favour of the complainant.
Since AFCA started operating in November, it has overseen $83 million being paid to consumers and small businesses in settlements. This includes matters previously received by its predecessor, Financial Ombudsman Service, and resolved by AFCA.
The government body collected 1,684 complaints about investments and financial advice, 5 per cent of its total complaints. Around 43 per cent of the sector’s complaints were resolved.
A range of complaints were made around financial advice, with the most common including 350 claims about failure to follow instructions or an agreement, 229 about inappropriate advice and 141 that the adviser failed to act in their best interest.
Incorrect fees and costs were also a top issue, receiving 133 complaints. AFCA cited the royal commission exposing advisers for charging fees for no service.
The majority of complaints AFCA received (63 per cent) related to banking and finance, with around two-thirds (67 per cent) of those claims being associated with the big four banks.
Meanwhile, AFCA had 3,066 complaints about superannuation, making up 9 per cent of all complaints and more than double the amount of claims the authority initially anticipated. Almost half (47 per cent) were resolved.
Additionally, 879 complaints were received about life insurance, covering 2 per cent of all claims. Near half (48 per cent) were resolved.
Investments and advice
The review noted a “sharp increase” in complaints about foreign exchange trading products, 402 in total and 42 per cent of claims in the investment segment.
The complaints were reported to cover difficulty withdrawing funds, misleading conduct, pricing errors and discretionary trading.
One financial firm was said to generate almost 55 per cent of the foreign exchange complaints. It had its AFSL suspended by ASIC but is still a member with AFCA, allowing the body to still receive complaints about the business.
Other products causing strife in the investments sector were SMSFs (160 complaints), shares (138), mixed asset funds (136) and timeshare schemes (68).
Superannuation
The top superannuation issue was reported to be incorrect fees and costs, with 416 complaints, which AFCA noted was a contrast against a small number of claims being received by the Superannuation Complaints Tribunal.
The second highest issue was delay in claim handling (332 complaints), followed by account administration error (229) and death benefit distribution (200).
Nearly two-thirds of super complaints (62 per cent) were resolved within 60 days.
“Given the media focus on responsiveness to consumers and dealing with their matters as quickly as possible, financial firms need to ensure that their internal dispute resolution and external dispute resolution teams are adequately resourced to deal with the complaints coming through the doors,” AFCA said.
Banking and finance
In the top issues under banking and finance causing complaints, unauthorised transactions generated 2,071 claims, misleading product/service information caused 1,241 complaints and incorrect fees/costs produced 1,127. Credit reporting was the top issue at 2,282 complaints.
The fairness project
In the report, AFCA also revealed it is undertaking a ‘fairness project’ in an attempt to map community expectations and produce a set criterion for fairness to be used for assessing complaints.
ASIC has demanded fairness in the finance sector following the royal commission, with the Council of Financial Regulators last week updating its charter for the first time to say it recognises the benefits of a “fair financial system”.
AFCA has engaged independent consultants to review a sample of its decisions and test them against its decision-making criteria. The second stage in its plan is to then develop its approach to fairness – and how it assesses it between a financial firm and a complainant.
Financial firms have been required by law to cooperate with AFCA to resolve complaints since April. ASIC recently cracked down on AFSLs who had not yet obtained memberships with the body.
what no insurance complaints ,then why are risk advisers being singled out as being the bad guys and having their business values decimated
Judging by the the very low number of complaints against advisers as opposed to the overall level of complaints, its clear that the advice community has been scapegoated…again!. Correct me if i’m wrong, but Kelly O’Dwyer in justifying the creation of FASEA cited that the body was established to address the scandals in the advice industry, and was quoted last year saying “planners needed to remember why FASEA had been necessary – repeated instances of inappropriate or just plain bad advice has significantly eroded trust and confidence in the financial advice sector” Certainly a broad statement when inappropriate and plain bad advice has come out of the banks that have now absolved themselves of any wrong exiting the planning space and leaving those remaining, mostly in small business to deal with the mess, reputational damage and increased costs. Further, the planner James Gibb that was jailed for 10 years last week held a Bachelor of Law with honors, various other qualifications and member of FPA etc, yet still his qualifications did not stop him conducting a crime! Education is important, but it does not stop inappropriate advice or crimes occuring and I look forward to seeing what the next round of standards will be post FASEA when we have the next GFC or event where people unfortunately suffer some sort of financial impact.
Advertising on social medial works well, apparently:)
I have to agree with the ‘Anonymous’ comments below about the 5% getting smashed by regulators, commission reductions and further threats of reducing them further, the FASEA farce and the LIF reforms.
When you read the above stats, how can it not infuriate people with how ‘common sense’ has completely gone out of big business today?
How can clear patterns of financial services regulation failure overseas be totally ignored?
How can industry bodies like FASEA have conflicts of interest yet be allowed to continue profiting from their decisions while passing judgement over advisers who, according to the above, are pretty much doing the right thing?
It’s perfectly clear where 95% of the consumer issues in the financial services start yet all the penalties seem to continually bypass the perpetrators and instead, land in the laps of independent (oh sorry ASIC….non-aligned) advisers instead. (Yet another pathetic example of ASIC focusing on the scratch on the windscreen, instead of the bigger picture)
How does this keep happening? When will common sense return to the decision making process?
Like ‘Anonymous’ says below….”This industry is a joke” as are the idiots running it now!
So reading this correctly? 5% of complaints relating to Financial advisers and 76% of complaints relating to Banks and Super Funds.
Yet the only group (the 5% group) being the ones to suffer FASEA, LIF, loss of income, increased costs etc, etc etc.
Not a single insto exec having to do a degree or even an ethics course to keep their jobs, not a single insto exec having to take a pay cut?
This industry is a joke!
Your article is misleading. According to AFCA’s website “AFCA is not a government department or agency, and we are not a regulator of the financial services industry. We are a not-for-profit company, limited by guarantee that is governed by a Board of Directors, which includes equal numbers of industry and consumer representatives.”