Australian Financial Complaints Authority receives 41,528 complaints in first seven months of operations
AFCA has thus far awarded $99 million in compensation.
The Australian Financial Complaints Authority (AFCA), the single external financial dispute resolution scheme in Australia, has posted some metrics concerning its activities during its first seven months of operations.
In the period from November 1, 2018 to May 31, 2019, AFCA received 41,528 complaints. As at May 31, 2019, 65% of these have been closed. The body has awarded a total of $99 million in compensation. This includes matters previously received by AFCA’s predecessor, Financial Ombudsman Service, and resolved by AFCA since November 1, 2018.
Investments accounted for 5% of all complaints. The main product issues for investment complaints are as follows:
- Failure to follow instructions/agreement – 412;
- Inappropriate advice- 280;
- Failure to act in client’s best interests – 167;
- Incorrect fees/costs -160;
- Misleading product/service information – 110.
Earlier in July, the Australian Securities & Investments Commission (ASIC) provided an update on its intervention with firms that had not obtained membership in AFCA as required under the law. Membership in the single dispute resolution scheme is compulsory for all AFS licensees, Australian credit licensees, superannuation trustees and other financial firms that provide services to retail clients.
After commencing operations on November 1, 2018, AFCA advised ASIC that 58 financial services licensees and 217 credit licensees that previously held external dispute membership with one of the previous schemes, had not obtained AFCA membership and may be in breach of their licence conduct obligations.
Following ASIC’s intervention with these potentially non-compliant financial and credit licensees:
- 50 financial services licensees subsequently obtained AFCA membership;
- 4 financial services licensees voluntarily cancelled their licenses;
- 4 financial services licensees were cancelled or suspended by ASIC;
- 131 credit licensees subsequently obtained AFCA membership;
- 38 credit licensees voluntarily cancelled their licenses, and
- 48 credit licensees were cancelled or suspended by ASIC.