Consumer trust isn’t something to be taken for granted, but reports from the UK, US and here at home are all pointing towards an uplift in trust levels around financial advice, which can only be a welcome development.
There are significant tailwinds behind the financial advice industry at the moment, but some major obstacles are still preventing advice practices from taking advantage of surging demand according to a new study from CFS.
Advice complaints trend remains positive
The Australian Financial Complaints Authority (AFCA) this week released an initial data snapshot covering their role as ombudsman to the financial and investment sector. The report showed a 3 per cent increase in total complaints for the 2022 financial year, hitting 72,358 in total. The authority was also able to clear 71,152 complaints resulting in over $207 million in compensation.
Recent trends showing flat or falling complaints against advisers continued with the report 1,628 licensee members had received a complaint, and that the number of licensed financial firms was actually 5 per cent lower than in the previous 12-month period.
The data remains difficult to analyse with super fund trustee and adviser complaints grouped into a single line, which saw 3,765 complaints compared to 3,643 in the prior year. The source of these complaints is quite broad, with ‘service quality’ and ‘delay in claim handling’ the most common in superannuation, while ‘interpretation of product terms and conditions’ and ‘service quality’ were the highest in investments and advice.
The fact that just 281 complaints were lodged about ‘failure to act in client’s best interests’ and 241 for the provision of ‘inappropriate advice’, shows the legislative changes may well be having a positive impact on the industry.
That can’t be said across the board however, with recent natural disasters causing a doubling in complaints with a particular focus on insurance providers. The Big Four Banks accounted for close to 20,000 or 28 per cent of all complaints and insurers 13 per cent. That said, some 67 per cent of complaints are being resolved between the parties once it is referred.
Commenting on a positive trend in hardship complaints about the banking sector, Chief Ombudsman David Locke, said “we continued to see lower levels of hardship complaints in 2021-22, reflecting the work that the banking sector has done to support consumers in recent years.”
“That’s really positive. However, we’ll be working with industry and consumer groups as we monitor the impact of cost-of-living pressures and higher interest rates on financial services consumers in the coming year.”
