Who to turn to if you have a problem with your financial adviser

If you have a problem with your financial adviser or investment product, it can feel both disappointing and a little daunting trying to work out what to do.

The important thing to remember is you have a right to complain and ask for your problem to be investigated and – hopefully – rectified.  

Whether it’s a concern about poor advice, incorrect fees or questions about how your private data has been handled, there are organisations that can assist with free dispute resolution services.

If you want to get things sorted, however, you need to follow the correct dispute process and ensure you have records to support your argument so it can be properly assessed by the independent referee.

Complaining the right way

If you’re upset with your financial adviser about some aspect of the advice or service you’ve received, talking to them about it is usually the last thing you want to do. However, telling them you’re unhappy is generally your best move, as they may be able to solve the problem immediately.

If you are not satisfied with their response to your complaint, the next step is to make a formal complaint through the advice firm’s internal dispute resolution (IDR) process. The IDR process and contact details is usually explained in the Financial Services Guide (FSG) and Product Disclosure Statement (PDS) you received when you first began working with your financial adviser.

Financial advisers must have a clear internal process in place for handling complaints. All Australian Financial Services (AFS) licensees must have an in-house process for handling complaints, including a system for dealing with complaints about how they’ve handled a client dispute. To find out more, contact your financial adviser or their AFS licensee (often one of the major banks or insurance companies).

You can also complain to your adviser’s professional body. Check ASIC’s Financial Advisers Register to find the right professional body.

How to complain in writing

Generally, the first step in making contact with the firm’s IDR is to make contact by phone, mail or email expressing your concerns.

While you are free to make your complaint over the phone – the Australian Securities and Investments Commission (ASIC) says financial firms must accept phone complaints – a letter or email can still be a good idea to ensure you cover everything you want to say. It’s also helpful to have the letter/email on file so you can prove you’ve contacted your service provider if you have difficulty getting a response and need to contact an external body.

Legislation requires all financial services businesses to belong to an EDR scheme and this body is responsible for handling complaints that cannot be resolved by the organisation’s internal dispute team.

If you do decide to write a formal letter, there are several free templates available to help create an effective letter of complaint. Although these may not cover exactly the issue you want to complain about, they are a good place to start and give you an idea of how to prepare an effective complaint letter. You can amend them to suit your personal situation and add your personal details and information:

• Financial Rights Legal Centre’s sample letter generator — for complaints about insurance, credit matters and bank accounts
• Australian Competition and Consumer Commission (ACCC)’s complaint letter tool — for complaints about consumer products and services.

Which complaints body is right for you?

If you’ve contacted your financial adviser and are still dissatisfied, it may be time to move on to their EDR scheme.

The main EDR bodies that handle complaints related to financial advice issues are AFCA and the Office of the Australian Information Commissioner.

1. Australian Financial Complaints Authority

AFCA considers complaints about financial services in areas such as:

• Credit, finance and loans
• Insurance
• Banking deposits and payments
• Investments and financial advice
• Superannuation

AFCA’s role is to assist consumers and small businesses reach agreements with financial firms about how to resolve their complaints. It is a free, impartial and independent body. If a complaint cannot be resolved between the parties, AFCA will decide an appropriate outcome.

AFCA’s decisions can be binding on the financial firm and it may award compensation for losses suffered because of a financial firm’s error or inappropriate conduct.

AFCA does not award compensation to punish financial firms or impose fines.

You can complain to AFCA online here or download a copy of the AFCA complaint form to complete and mail.

Complaints AFCA is able to consider

Under the current legislation, AFCA is able to consider a variety of complaints in relation to investment products or the financial advice you have received:

• Advice a financial firm gave you about financial products, which you believe may have been inappropriate, misleading or insufficient.
• Complaints where the financial firm failed to act in your best interests or failed to prioritise your interests in providing financial advice.
• Charges were incorrectly applied, or fees/costs were calculated or charged incorrectly, or were not charged in accordance with the information provided to you.
• Disclosures the financial firm didn’t make (such as incorrect or misleading information about the risks of an investment product).
• Decisions your financial firm made or failed to make.
• Instructions you gave that were not followed (such as failing to buy or sell a financial product when asked to do so).
• Privacy and confidentiality (such as refusing access to personal information or inappropriate use of this information).
• Service levels (such as delays or failing to provide language assistance).
• Providing incorrect information about your accounts or loss of documents or property.
• Undertaking transactions without written or verbal authority.

Complaints AFCA cannot consider

• Management of a fund or scheme as a whole.
• Level of a fee, rebate or interest rate unless it’s related to the issues above.
• Complaints already dealt with by AFCA unless there is sufficient additional information or different circumstances in the new complaint.
• Complaints dealt with by a Court, dispute resolution tribunal established by legislation or a predecessor scheme.

Even if a complaint is not excluded by the AFCA rules, it may still decide not to consider it if it believes this is appropriate.

AFCA and SMSF financial advice

AFCA does not class complaints about SMSFs, or financial advice relating to super not provided by a super trustee, as a super complaint. It will only consider these disputes under its investments and advice jurisdiction.

In 2021–22, AFCA received 259 complaints from SMSF members related to investments and advice.

The difficulties relating to AFCA acting as a source of assistance for SMSF members seeking help about inappropriate financial advice was highlighted by the plight of Dixon Advisory’s SMSF clients. The advisory firm went into voluntary administration in January 2022 while AFCA was investigating numerous complaints about it.

The Dixon Advisory complaints were paused when the company moved into voluntary administration as AFCA’s policy in relation to complaints about insolvent firms and those in voluntary administration is not to proceed with the complaints process “when there may be no prospect of compensation being paid by the firm because of insolvency”.

New Compensation Scheme of Last Resort

Dixon Advisory’s SMSF clients may have more joy following the passing of new legislation to establish a Compensation Scheme of Last Resort (CSLR) in June 2023. The legislation includes eligibility criteria and identifies matters outside the scheme’s scope.

AFCA is currently establishing the CSLR as a separate body, with a planned April 2024 start date for the body to begin taking compensation claims. It is also reviewing the status of nearly 5,000 paused complaints it has received relating to insolvent financial firms.

The CSLR will pay up to $150,000 in compensation to eligible consumers who have received an AFCA determination awarding compensation in relation to complaints in one of four areas: personal financial advice, credit intermediation, securities dealing or credit provision.

2. Office of the Australian Information Commissioner (OAIC)

Financial advisers need to collect personal information about you to provide appropriate advice. They will usually need to collect your name, address, email address, phone number, date of birth and Tax File Number (TFN). They also collect information about your employment (including salary) and, in some situations, information about your health and medical history if you are interested in life insurance.

If you believe your privacy has been breached in relation to this information, you should contact the financial advice firm’s privacy officer to complain.

If you are unhappy with the response – or if the firm has not responded within 30 days – you can contact AFCA or the OAIC (www.oaic.gov.au) about the privacy breach.

You can only contact the OAIC about a breach in the handling of your sensitive personal information, such as your TFN and health identifiers.

Complaints must be made in writing (letter or email), or online using the OAIC’s Privacy Complaint Form.