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

When you’ve taken professional advice and invested your hard-earned money, it’s disappointing to find the advice was inappropriate or misleading. And that’s before you face the challenge of trying to get the issue rectified.

The important thing to remember is you have a right to complain if you aren’t happy with the service you have received. In most cases, your financial adviser and their licensee will want to help sort out the problem. 

If the issue can’t be remedied with your adviser and you need more help, there are organisations set up to assist you. They provide free dispute resolution services that allow both sides to work through the complaint process.

The key to successfully resolving a complaint is to follow the appropriate steps in the complaint process and ensure you keep detailed records to support your case.

Complaining the right way

If you’re upset with some aspect of your financial adviser’s advice or service, 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.

Your adviser must acknowledge the dispute within 14 days. If you are not satisfied with their response, 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 are usually explained on the firm’s website or in the Financial Services Guide (FSG) you received when you first began working with your 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.

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 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 dispute bodies handling complaints related to financial advice products are AFCA, the Compensation Scheme of Last Resort 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 on 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 received:

• Advice you were given 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 (such as the suitability of an investment) 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.

2. Office of the Australian Information Commissioner (OAIC)

Financial advisers need to collect personal information about you to provide appropriate advice. They will usually ask for 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. It cannot assist you with broader, non-privacy issues relating to the financial service you received.

Complaints can be mailed using the OAIC’s Privacy Complaint Form or the online complaint form.

3. Compensation Scheme of Last Resort (CSLR)

On 22 June 2023, legislation was passed establishing a Compensation Scheme of Last Resort (CSLR), with the scheme formally commencing operations on 2 April 2024.

The CSLR can pay up to $150,000 in compensation to eligible consumers who have received an AFCA determination awarding compensation that remains unpaid for complaints covering:

• Personal financial advice provided to retail clients on relevant financial products
• Credit intermediation
• Securities dealing for retail clients (but not issuing securities)
• Credit provision.

Before you can lodge a claim with CSLR, you must first complete the AFCA complaint process.

Financial services outside the scope of the CSLR include:

• Managed investment schemes
• Dealing in foreign exchange or derivatives
• Consumer credit insurance
• Funeral insurance
• Scams.

The CSLR is funded by the financial services industry and operates separately from AFCA. All other avenues must be exhausted before you may be eligible to make a claim with CSLR.

To be eligible for a CSLR payment, you must:

• Have an unpaid AFCA determination for an eligible product
• Not be entitled to compensation under any other statutory scheme
• Be unlikely to be fully paid in the future.

For more detailed information about lodging a claim for compensation, visit the CSLR website.