AFCA sympathetic to adviser complaints during COVID-19

Despite the risk of increased complaints against advisers during the COVID-19 pandemic, if advisers continued to follow best practices and best interests of clients, the Australian Financial Complaints Authority (AFCA) are unlikely to refer any complaints for resolution in the future.

Speaking at Money Management’s Retirement Income Webinar 2020, Shail Singh, AFCA ombudsman, said the regulator was conscious of the environment advisers were operating in and was aware that people would unfairly point the finger at advisers.

“The Global Financial Crisis is a great comparison point and we did get lots of disputes; whenever the market performs badly people will turn that on their adviser,” Singh said.

“The main thing is to have that conversation, I know that might sound basic, but a lot of the time we get disputes it’s because the adviser hasn’t communicated how the strategy stands up during the relevant period.

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“We find the ones who are constantly communicating with their clients, rather than changing strategy or taking a knee-jerk reaction, tend to do the best.

“Often disputes end up in AFCA because of a relationship breakdown, which in turn comes from not communicating and not having the meeting in the first place.”

If the dispute was performance only, under AFCA rules it must be excluded, and it could not look at a dispute purely about investment performance.

“If it’s not purely about investment performance, we’ll look at whether the best interest duty was satisfied,” Singh said.

“We’ll look at whether they adequately understood the client, the risk profiling was correct, the goals were correct, and the advice was correct.

“We understand the context that it’s a difficult time for advisers but we’re also conscious people will point to the adviser unfairly sometimes in these particular periods.”