Is SDB the new acronym we need to help with AFCA & ASIC issues?

There is dissatisfaction and anger with AFCA and their processes. There are feelings of victimisation and unfairness with AFCA outcomes from financial advisers. There is an overwhelming fear from advisers about ASIC, how to avoid issues and the futility of trying to provide advice when you can’t “beat” ASIC no matter what you do.

Financial advisers and licensees are dealing with so much right now. To quote current popular language – it is “A LOT”.

As well as the now normal COVID anxiety, the legislative changes, care and concern for clients in trouble, market issues, economic challenges and changes, and the challenge of totally changing business models and studying while still running a viable business (and life) are “hectic”.

There is little wonder advisers are feeling victimised and overwhelmed. When people are getting challenging feedback on their job there are usually positive messages to balance the impact. Praise and positives are currently (and unfairly) few and far between.

However, I do need to provide another perspective on the AFCA and ASIC issues. Not all clients receive good advice. They have a right to complain and receive compensation if they are treated badly. I don’t have statistics on valid complaints, and most advisers do a good job, however like every industry there are still dodgy participants.

I have helped clients with the AFCA (and formerly FOS) process for valid complaints. I would like to note the following:

1. It is not easy. There is significant effort required to lodge complaints, and it is very confusing for people who don’t know much about financial planning or aren’t particularly literate or financially literate. It is hard for a client who has genuinely lost money and is struggling financially.

2. While there are likely clients “gaming” the system and lodging false complaints, there are also financial planners who bully clients. I have seen a practice use language tricks and intimidation, repeatedly claim they have done things without evidence, and even try to influence the AFCA process via personal contacts.


3. I have not personally experienced AFCA coaching the client to continue a complaint past a resolution stage (not saying it doesn’t happen).

4. There are many opportunities for input from the adviser. Firstly, the initial complaint to the adviser. Then initially with AFCA. Then in response to client submissions. Then at mediation stage (if applicable). Then again in response to anything raised in mediation. Then after an initial assessment from AFCA. Yes that involves a lot of work, however if there are appropriate records kept of advice and process you do have a chance to present these, and resolve along the way if you can.

5. If you check the past AFCA/FOS determinations (available online) there are numerous cases dismissed if they are just about investment returns. AFCA tell clients they can’t help with investment return complaints and state this on the website.

6. I had a false complaint lodged against me when I was an adviser. It was rapidly dismissed by FOS as all evidence was available to prove the claim was unjustifiable. Of course it was stressful and a huge waste of time.

7. I have given opinions to clients that believe they have a complaint that the evidence was not in their favour and often the complaint is a misunderstanding. I can’t tell them they shouldn’t try to complain, however I will not assist someone who does not appear to have a valid complaint.

8. AFCA lets people know they don’t need a lawyer.

9. If it is true that wholesale and sophisticated investors are using the AFCA system when they should likely go through the courts, that appears to be a problem.

10. With ASIC, there was a recent webinar with the FPA where Danielle Press stated that only 7 per cent of issues reported were investigated. Are they relying strongly on self-reporting of breaches by licensees? If so the people doing the right thing are penalised, as some (again a minority) self-licensed practices are not always reporting breaches. What about all the issues not reported though?

So, what happens when you have systems that both the clients complaining, and the advisers receiving complaints feel is unfair, slow and unwieldy?

What recourse should advisers have if they feel they are mistreated?

What is fair for clients who don’t understand and genuinely need help?

Are we all desperately hoping a new single disciplinary body will help both clients and advisers with a system that considers the law, fairness, and allows sufficient investigation from experienced industry insiders and consumer advocates to come to reasonable outcomes for both sides?

In the meantime, for advisers I recommend:

1. Keep records of everything, large or small. Keep every email, keep date recorded file notes of every conversation, keep records of your advice documents and supporting documents being delivered and explained. Record conversations and Zoom meetings if appropriate.

2. Don’t expect clients to understand everything. Even when they say they do, they often don’t. They don’t want to look or feel stupid. Constantly educate them.

3. Act for the clients, check your documents and present them in plain language without jargon. Best interests duty helps the clients and you.

4. Keep them happy with great rapport and service. Happy clients who know you well are less likely to complain.

5. If you have a complaint at practice level then handle it really well. Most clients want to be heard first, and compensated second. Most don’t want to take complaints further but will get very upset if they feel brushed off.

6. Be ethical and professional. Having reviewed many advice files, ethics are pretty easy to spot. Mistakes can be made by anyone but ethics shine through.

7. Get support if you need it. Take care of yourself so you can focus on your job and deal with challenges.

And let’s hope that the next acronym, SDB (Single Disciplinary Body), is the one we have been waiting for. Put some effort into advocating for this to be great and replace our current chaotic mess.

Melinda Houghton, Insider Out

Is SDB the new acronym we need to help with AFCA & ASIC issues?
Melinda Houghton
ifa logo

Subscribe to the ifa bulletin

Receive daily online news,analysis, reports and business strategies
By signing up you agree to our Terms of Use and Privacy Policy

from the web

Website Notifications

Get notifications in real time and stay up to date with content that matters to you.