AFCA Leverages Enhanced Standards to Minimize Advice Complaints
AFCA Leverages Enhanced Standards to Minimize Advice Complaints
2
The information on this website is general in nature and does not take into account your objectives, financial situation, or needs. Consider seeking personal advice from a licensed adviser before acting on any information.
The Australian Financial Complaints Authority (AFCA) demonstrated significant progress in managing investment and financial advice issues in the past year.
The organization reported closing 4,118 complaints in the sector during the 2024 fiscal year, marking an impressive 82% increase in resolved cases compared to the previous year.
Interestingly, the number of new complaints AFCA received in this sector fell to 3,559, a notable decrease of 26% from the preceding year. According to its annual report, AFCA attributed this decline to the positive impact of rising educational standards and heightened professionalism within the financial advisory industry.
However, challenges persist, particularly concerning the controversial case of Dixon Advisory, which continues to contribute to overall complaints. Without the Dixon Advisory-related grievances, complaints hit an all-time low of 2,709.
Lead Ombudsman for investments and advice, Shail Singh, noted during AFCA's recent member forum that outcomes were not universally favoring complainants. For instance, one claimant involved with Dixon did not suffer harm despite following conflicted advice.
Moreover, Senior Ombudsman Patrick Hartney highlighted, “When compared to what AFCA deemed appropriate advice, the complainant was actually better off with the conflicted advice result.” Hartney explained how cookie-cutter approaches to advice might have variable impacts based on individual circumstances, proving beneficial to some despite being generally suboptimal.
The AFCA annual report further elaborated that nearly half (44%) of the complaints they handled were resolved during the "rules review" phase. This stage, where issues are examined for jurisdictional appropriateness, requires detailed decision-making, explaining the average resolution timeframe of 129 days. Such intricate processes have been partly responsible for protracted case durations.
While complaint volume has decreased, the top issue remains inappropriate advice, which accounted for 706 (20%) of all complaints. Other recurring issues include confusion over the classification of Self-Managed Super Funds (SMSFs) and wholesale client status, often leading to misapplication of financial thresholds, an insight noted by Sidoti, the Senior Ombudsman.
“It’s pretty clear that actually doesn’t apply in circumstances where advice is given to a trustee to an SMSF,” confirmed Sidoti. Misapplication of these financial thresholds can categorize SMSFs inaccurately, with serious advisories issued for small balance SMSFs lacking diversification.
With market volatility influenced by national political events, the authority has observed complaint trends shifting accordingly. Beyond handling regular disputes, AFCA has now been endorsed by the government to lead an external resolution scheme under the Scams Prevention Framework, a major initiative in the governmental “war on scams”, as stated by Minister Stephen Jones.
The pilot will cover three key sectors: banks, telecommunications, and digital platforms, illustrating an expansive approach to scam management involving interconnected industries.
Published:Monday, 28th Oct 2024 Source: Paige Estritori
Please Note: If this information affects you, seek advice from a licensed professional.
The Australian Securities and Investments Commission (ASIC) has commenced a thorough review of the motor vehicle finance sector, focusing on enhancing consumer protections and ensuring compliance with responsible lending obligations. This initiative is particularly attentive to the experiences of borrowers in regional and remote areas, including First Nations communities. - read more
The Australian government has unveiled a new initiative to make electric vehicles (EVs) more accessible to a broader segment of the population. This program offers low-interest loans to Australians earning less than $100,000 annually, as well as to essential workers such as police officers, teachers, firefighters, and nurses, regardless of their income level. The loans are available for both new and used EVs priced up to $55,000. - read more
Macquarie Bank has announced a strategic decision to cease offering new car loans through its direct, broker, and novated leasing channels. This move is part of the bank's broader strategy to concentrate on expanding its home loan and deposit services. - read more
The Australian Securities and Investments Commission (ASIC) has recently conducted a comprehensive review of the nation's motor vehicle finance sector, uncovering significant issues that raise concerns about responsible lending practices. The findings indicate that some consumers are being subjected to exorbitant fees and are defaulting on their loans shortly after approval. - read more
In a significant development within the Australian financial sector, Allied Credit has announced the acquisition of a substantial portion of Macquarie Group's car loan portfolio, valued at $1.5 billion. This strategic move is set to bolster Allied Credit's position in the car finance market and expand its customer base. - read more
Car loans play a pivotal role in empowering individuals to afford their own vehicle, which can be a significant purchase. These loans, structured to fit within one's financial situation, can ease the burden of acquiring a car and assist in achieving personal convenience and mobility. - read more
When planning to take out a car loan, it is crucial to start by understanding your budget. Consider how much you can realistically afford to borrow without straining your finances. Assessing your monthly income and expenses will help you arrive at a sensible figure, ensuring you don't overcommit. - read more
Before taking the plunge into car ownership, it's crucial to have a clear view of your current financial health. Start by evaluating your income, monthly expenses, and any savings you may have set aside. This assessment will give you a realistic picture of how much you can allocate towards buying a car without straining your finances. - read more
Buying a car is a significant financial decision, and understanding the loan terms involved is crucial to navigating this process effectively. Loan terms can dramatically affect how much you end up paying over the life of your loan, and they play a pivotal role in ensuring that you are empowered during the car buying process. These terms determine your monthly payments, interest rates, and the total cost of the car in the long run. - read more
There's a unique thrill that comes with purchasing a new car; it's not just about getting from point A to B, but about fulfilling a dream and the freedom of the open road. However, with the excitement comes the need for careful planning and smart decision-making to ensure that your investment pays off in the long term. - read more
Need Help Finding a Loan?
Get a free car loan eligibility assessment and compare offers tailored
specifically to your circumstances.
All finance quotes are provided free (via our secure server) and without
obligation. We respect your
privacy.
Knowledgebase
Derivative: A financial security whose value is dependent upon or derived from an underlying asset or group of assets.
