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Big drop in external advice disputes

Investment disputes lodged with the Financial Ombudsman Service (FOS) fell 25 per cent in the 2013 financial year, but advice remained the key component of those disputes.

Investment disputes dropped to 1,214 from 1,626 in the 2012 financial year, making up five per cent of the total 32,307 disputes received for the year – down 11 per cent from the year before.

FOS chief ombudsman Shane Tregillis told ifa the three key issues for the overall decline were a large drop in credit related matters (from 13,242 to 12,408), a reduction in issues related to natural disasters such as the 2011 Queensland floods, and a “washing out” of issues directly related to the global financial crisis (GFC).

“This is the first year we’ve had a levelling out after double-digit increases in previous years,” he said.

“Investment disputes are a much smaller percentage [of total disputes than credit and general insurance disputes] but they’ve also decreased; that probably reflects the washing out of the impact of the global financial crisis.”

Following many GFC-related claims pertaining to the collapse of agribusiness managed investment schemes and advice failures such as Storm Financial, disputes around managed investments fell more than any other sub-category.

There were 1,157 managed investment claims in 2011, which dropped to 931 last year and 579 in the latest review – a 38 per cent decrease on the prior year.


Mixed asset funds continued to be the most common managed investment product people complained about, with 346 disputes (down from 613 the previous year).

The main issue in managed investment disputes was advice (51 per cent), followed by financial services provider decision (13 per cent) and disclosure (8 per cent).

Many investors complained the advice they had been given was inappropriate, according to FOS, saying it did not accord with their financial position, goals and tolerance of risk.

A majority (62 per cent) of managed investment disputes involved a financial adviser, while 27 per cent involved a managed investment scheme operator or fund manager.