Over 2,500 fund management-related complaints made about advice in last financial year

In an ASIC-commissioned report by Deloitte about competition within the funds management industry, the Australian Financial Complaints Authority (AFCA) reported that 2,766 complaints were made, 409 of which related specifically to managed funds.

The report stated that 757 complaints related to misleading product or service information, 585 related to inappropriate advice and 469 were made about a failure to act in a client’s best interest.

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AFCA said that most complaints relating to misleading product or service information may be due to consumers being influenced the “quantity of advertisements” rather than the content.

“Investors who constantly see advertising are also less likely to rely on disclosure to make decisions,” AFCA said.

In relation to managed funds, Deloitte said that the data shows that despite the level of regulation and intermediation, retail investors are still experiencing issues in the sector.

Investors may also find it difficult to compare funds if features such as research ratings, performance metrics and fees are “inconsistently presented”.

“The large number of funds available to consumers can lead to choice overload, which in turn can impede decision-making,” the report read.

“While variety and choice are valuable features of competitive markets, choice overload can overwhelm consumers and lead them to make decisions based on only one or two product features or take no action.

“Choice overload may also prevent investors from making comparisons, due to the high associated transaction costs.”

On a wider scale, it was reported in July that over 70,000 complaints were lodged in the last 12 months from Australians in disputes with banks, super funds, financial advisers, investment firms and insurers.

Almost 70 per cent of the 70,510 complaints made were resolved by agreement and nearly 60 per cent were resolved within 60 days.

Of the complaints, 14 per cent were made about credit card issues including default listings and unauthorised transactions.

Over $240 million in compensation and refunds were secured from the complaints lodged.