Advice burdens and ‘minimal' client benefit noted under AFCA
The new Australian Financial Complaints Authority is likely to provide little in terms of benefit to clients and just adds an extra burden to firms, according to one adviser.
Speaking to ifa, EFS Strategic director Michael Rees-Evans said the replacement of the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal with AFCA would have “minimal client impact”.
“Most clients do not need recourse to an ombudsman or similar, and when they do the information is available on our financial services guides (FSGs),” he said.
However, Mr Rees-Evans noted where AFCA is unhelpful for clients, and advice firms by extension, is in the way they need to receive a new FSG when that may be the only change being disclosed.
He also said it is very unhelpful and bureaucratic in the way AFCA was implemented, requiring all AFSLs to have to notify ASIC by a specific date, with the effective date backdated, when it was a change imposed on advice firms.
“Overall, this seems to have been a change that only benefits the bureaucracy that oversees advice, with minimal effect on clients and yet more burden on advice providers,” Mr Rees-Evans said.
On the other hand, Thompson Financial Services director Phil Thompson said it is great that there is one complaints authority to handle all ongoing issues to do with debt, insurance, banking, investments and superannuation, replacing the previous confusing set up of multiple complaint authorities. He said his personal experience with the transition has been “seamless”.
However, Mr Thompson said he also expected the number of memberships he’s required to hold would have decreased.
“Currently as an adviser and mortgage broker, I'm required to be covered under three separate memberships,” he said.
“The financial advice licensee is required to hold a membership of which I’m covered under, my authorised credit representative company needs a membership and myself individually as a mortgage broker I'm required to hold a separate membership.”
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