Shail Singh

The Australian Financial Complaints Authority (AFCA) welcomes ASIC’s updated guidance that clarifies how existing laws apply to digital assets.

Firms providing services related to digital assets that are financial products, including wrapped tokens, stablecoins, tokenised securities and digital asset wallets, are now required to become a member of AFCA and lodge an AFSL application by 30 June 2026 in line with Information Sheet 225.

“The updated guidance from ASIC requiring digital asset businesses to have an Australian Financial Services Licence means vital consumer protections are extended to investors of cryptocurrency and digital assets,” AFCA’s Lead Ombudsman for Investments and Advice, Shail Singh said.

“We expect better regulation will reduce fraud and security issues, and it also means cryptocurrency platforms will need to have internal dispute resolution processes for their customers, should they have an issue with a product,” Mr Singh said.

“Consumers will also have the right to come to AFCA, as an independent umpire, if they can’t resolve a dispute with a licensed firm.”

Until now, cryptocurrency was not regulated as a financial product under the Corporations Act, so providers of cryptocurrency or digital assets were generally not required to be members of the AFCA external dispute resolution scheme. However, some had chosen to be voluntary members or were members under a condition of an industry association.

In the 2024-25 financial year, AFCA received 159 complaints about cryptocurrency firms that were voluntary members.

The top three issues were scams, interpretation of product terms and conditions and failure to act in a client’s best interest.

Mr Singh said AFCA would work with digital asset businesses to ensure a smooth transition to the new arrangements.

“We stand ready to share our knowledge and expertise in complaint handling, with the common goal of preventing disputes in the first place and addressing those that do arise in a fair and efficient way.”

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AFCA plays a vital role in consumer protection across the financial services sector by providing an accessible, independent, and binding dispute resolution process.

As essential component of a robust framework for protecting financial consumers is the presence of mechanisms that hold individuals and organisations to account for causing consumer harm and allow consumers financial redress in the event they suffer such harm.

In financial advice, there is a triumvirate of bodies who fulfil these functions, the Australian Financial Complaints Authority (AFCA), the Compensation Scheme of Last Resort (CSLR), and the Financial Services & Credit Panel (FSCP).

For the vast majority of compliant, financially health advice practices, AFCA is the body most likely to be interacted with, and this article will look under the hood, in order to provide advisers a practical working knowledge of AFCA, including its remit, processes, costs, and criticisms.

AFCA – the single dispute resolution body

AFCA was established in November 2018, replacing three existing External Dispute Resolution (EDR) bodies – the Superannuation Complaints Tribunal, the Financial Ombudsman Service (FOS), and the Credit and Investments Ombudsman (CIO)^[1]. It operates as an independent not for profit body, funded by the financial service providers who comprise its membership. ASIC has oversight of AFCA.

Membership of AFCA is compulsory for Australian banks, insurers, credit providers, financial, debt collection agencies, superannuation members and many other businesses that provide financial products and services. Membership is also compulsory for financial advisers, at the licensee, rather than individual level.

The role of AFCA

AFCA’s primary purpose is to ensure fair and efficient resolution of financial disputes without the need for court proceedings. It fulfils this purpose by:

• investigating complaints about financial advice, banking, insurance, and credit
• assessing complaints based on relevant laws, regulations, industry codes, and fairness principles
• requiring firms to compensate consumers if a complaint is upheld.

AFCA also works to identify and report systemic issues, and works closely with stakeholders including regulators, product providers, and licensees to enhance compliance and professional standards.

AFCA plays an important role in identifying unpaid compensation and referring cases to the CSLR.

AFCA’s remit

The type of complaints considered by AFCA are broadly in line with the services provided by its membership, including:

• inappropriate financial advice​, including that relating to investments, superannuation, and life insurance
• denied insurance claims (both general and life)
• trustee decisions about distribution of superannuation benefits
• issues relating to loans, credit cards and short-term finance
• errors in banking transactions and credit listings.

Matters not considered include those relating to private health insurance and those relating to organisations who are not AFCA members.

Importantly – and sometimes controversially ­– AFCA may use its discretion to consider complaints relating to wholesale/sophisticated advice clients.

Financial limits can limit AFCA’s involvement

AFCA’s jurisdiction may also be limited by the size of the loss being claimed by a complainant. As of January 1^st, 2024, the maximum claim value AFCA will consider is $1,263,000, for insurance and advice cases^[2]. There is no limit for superannuation cases.

The maximum compensation AFCA can award per claims is $631,500.

AFCA processes

For complaints falling within its jurisdiction, AFCA will first aim to resolve any complaint it receives by informal methods, seeking to reach a settlement between the complainant and the financial firm through negotiation or conciliation.

If this doesn’t work, they may use more formal methods, involving a preliminary assessment about the merits of the complaint. Ultimately, AFCA may make a decision (called a determination). A determination will set out the circumstances of the complaint, AFCA’s assessment of the facts, and the steps the provider must take to resolve the complaint. This may include financial compensation.

In some circumstances, AFCA will skip the ‘arbitration’ stage and go straight to a determination. Examples of these circumstances^[3] include:

• when urgent finalisation is needed, for example if a complainant is experiencing severe financial hardship
• when complainants are impacted by a natural disaster, such as a bushfire or flood
• high value claims where prolonged proceedings could result in claim amounts exceeding AFCA’s financial limits
• low value claims involving serious personal circumstances, for example if the complainant is a victim of domestic abuse, or is suffering a serious medical condition.

Determinations are binding

Financial firms must comply with AFCA determinations against them, and there are no grounds for appeal with AFCA itself, only through the courts. This applies to complainants also.

Furthermore, a federal court case finalised in January 2023 reaffirmed the legal obligation financial firms have which is that they must co-operate with AFCA throughout the entire complaints process^[4].

The costs of AFCA to practices and licensees

AFCA’s services are funded by financial firms through membership fees and user charges, ensuring accessibility for consumers without direct costs.

Financial firms bear the costs associated with complaints lodged against them. In addition to a modest registration fee (currently $388.69)^[5], AFCA charges on a per complaint basis, giving firms an incentive to resolve complaints through internal dispute resolution processes before they reach AFCA.

As of March 2025, the current fee schedule applies:

To support smaller firms and encourage early dispute resolution, AFCA provides the first five complaints closed within a financial year free of charge^[7]. This approach is also celebrated for giving advisers more confidence to defend, rather than blindly settle, complaints.

Complaints trends

During the 2024 Financial Year, AFCA received 3,559 complaints in the investments and advice sector, a drop of 26 per cent compared to the previous year.

Excluding complaints related to Dixon Advisory, advice complaints reached an all-time low of 2,709 complaints, according to AFCA (the previous low being 3,207 during the 21/22 financial year.

As the table 2 shows, inappropriate advice remains the dominant type of investments and advice complaint received.

From a product perspective, the highest number of complaints related to equities.

Of all complaints resolved before the determination stage, 72% were resolved in favour of the complainant. Of all complaints that went to determination stage, 30% were found in favour of the complainant^[10].

How does AFCA calculate loss in financial advice complaints?

When AFCA upholds a complaint against an advice firm who has breached one or more duties to the consumer, they may rule that financial compensation is payable. The purpose of compensation is to place the consumer in the position they would have been in had there been no breach of duty.

The approach to calculating this compensation is informally referred to as the ‘but for’ approach. That is, AFCA will determine the financial position the complainant would have been in, ‘but for’ the breach of duty by the adviser.

In simple terms, the compensation amount – the amount of loss the consumer has suffered – is difference between the client’s actual financial position, and their ‘but for’ position.

As shown in table 3 above, the most common type of investment and advice complaint during FY 24 related to equities and equity-based products. In this type of scenario, AFCA will often be required to rule on the appropriateness of a portfolio for a particular client – in terms of its risk profile.

For example, where a consumer has received inappropriate advice which caused them to invest in an unsuitable portfolio of investments, it would be assumed that the consumer would instead have invested in a suitable portfolio of investments if they had been advised properly.

To work out the direct financial loss a consumer has suffered as a result of investing in unsuitable investments, AFCA will consider what would have been a suitable alternative, looking for an alternative portfolio of investments with the correct mix of defensive and growth assets. To do this, AFCA may need to use either a suitable benchmark asset allocation used by the financial firm or a comparable benchmark asset allocation.

In cases where it is harder to determine what the consumer’s position would have been if the breach of duty had not occurred. AFCA will consider a range of factors, including:

• how the consumer’s money was invested immediately before it was invested in the disputed investments
• whether the consumer was satisfied with their investments immediately before they made the disputed investments
• whether the consumer actively sought the financial adviser’s advice or had responded to an invitation to obtain advice
• if the consumer had actively sought the advice, the reason why they had done so
• whether the consumer had told the adviser that they had any investment preferences.

Full details of the AFCA approach to advice complaints can be found in their guide: ‘The AFCA Approach to calculating loss in financial advice complaints’.^[11]This guide includes the following case study from AFCA’s predecessor, FOS.

Case Study – compensation for inappropriate asset mix

Mr & Mrs Smith, both in their early 60s, inherited $1,000,000 and sought financial advice in 2006. Acting on the advice of the firm, they each invested $500,000 in allocated pensions, seemingly unaware of the fact that the asset allocation was 90% growth and 10% defensive (they believed the mix to be 40% growth and 60% defensive).

When the GFC occurred, the clients panicked and withdrew their funds, incurring capital losses of $160,000 and $185,000. They complained to the Financial Ombudsman Service (FOS), on the basis that the asset mix they were actually invested in (90/10) was dramatically different to what they believed they were invested in (40/60).

After considering all the facts, FOS determined that, had the clients received appropriate advice, and been invested in a portfolio with a 40/60 mix, Mr Smith would have been $35,500 better off, and Mrs Smith $45,000 better off. As a result, FOS ordered the advice firm to pay these amounts to Mr and Mrs Smith as compensation.

Criticism of the ‘but for’ approach

The ‘but for’ methodology used by AFCA has drawn significant criticism from industry bodies and financial advisers. This approach determines compensation by assessing what financial position a client would have been in ‘but for’ the advice they received. Critics argue that it is too theoretical, inconsistent, and unfairly punitive to advisers.

One major concern is that AFCA’s application of the methodology lacks clear guidelines and overestimates financial losses by considering alternative scenarios that may not have realistically occurred. Advisers argue that clients should be responsible for some level of investment risk, rather than being compensated for hypothetical lost opportunities.

The Financial Advice Association of Australia (FAAA) has been particularly vocal, arguing that AFCA’s assessments often ignore market realities and economic fluctuations, leading to inflated compensation claims.

Their harshest criticism was reserved for the way the ‘but for’ test was interacting with the CSLR – a system under which advisers are forced to fund unpaid determinations.

“So, the floor is not you’ve lost money. The floor is maybe you could have done a bit better in the Vanguard balanced fund, so here’s $150,000, and that’s where the anger is.” Sarah Abood, FAAA CEO^[12].

The SIAA similarly drew issue with application of the ‘but for’ method in the well-publicised Dixon advisory case, arguing that AFCA had erred by applying the methodology to the entire portfolios of affected clients, rather than just to the specific failed product at the centre of the controversy (a real estate trust, URF).

“We would expect a ‘but for’ calculation on the URF only would result in a significantly lower loss calculation compared to a whole of portfolio approach,” their submission to Treasury said^[13].

“AFCA has not provided an explanation as to why each investment in the portfolio should not have been held by the complainant and was not in line with their objectives based on the information readily available at the time, except to say they were related party products.

Both the financial services minister, Stephen Jones, and the shadow minister Luke Howarth, also agree that the CSLR should not be about guaranteeing investment returns but instead should aim to give genuine victims a form of redress.

Citing data which suggests 80 per cent of the compensation being paid by the scheme has been for foregone, hypothetical capital gains, the shadow minister called on the government to “intervene to limit or filter out these claims”^[14].

The ‘but for’ approach has also been criticised for essentially making advisers shoulder the burden for product failures, a criticism staunchly rebutted by AFCA, who argue that ultimately advisers are “gatekeepers” that need to ensure client portfolios are appropriately diversified.

As senior AFCA Ombudsman Alexandra Sidotti told an AFCA members forum in February 2025:

“When there’s a product failure, though, and that’s maybe 5 per cent of a person’s portfolio, that’s not going to have a catastrophic impact on someone’s superannuation funds. The issue that we’re really seeing here is a complete lack of diversification, and that’s an advice issue.”^[15]

Similarly, Lead Ombudsman Shail Singh said advisers wouldn’t bear the burden for the failure of products that were recommended in line with sound advice principles:

“If people put someone into a mortgage fund for 5 per cent, it was suitable to their portfolio, and there was no information to show that that fund was not going to perform – the adviser’s not responsible for that sort of conduct.”^[16]

While AFCA defends their approach as consumer-centric, critics argue it creates uncertainty, erodes adviser confidence, and could drive up professional indemnity insurance costs, ultimately increasing barriers to advice. Calls for greater transparency and reform in AFCA’s methodology continue to grow.

AFCA and wholesale advice

While wholesale advice is technically outside AFCA’s remit, they can use their discretion to consider wholesale complaints, if they believe the client has been misclassified as a sophisticated client, and provided the complaint falls within the jurisdictional dollar limits.

Commenting on the issue, AFCA Lead Ombudsman Shail Singh stressed that if someone is properly classified as wholesale, and are properly informed of the consequences it is highly unlikely they would pursue those complaints^[17].

Advisers operating in this space must ensure there is sufficient evidence of client informed consent, and an understanding of the consumer protections they have forfeited, when going down the wholesale path.

Conclusion

AFCA plays a vital role in consumer protection across the financial services sector – including financial advice – ensuring that disputes are resolved fairly and efficiently. By providing an accessible, independent, and binding dispute resolution process, AFCA enables consumers to seek redress without resorting to costly legal action. Its ability to investigate complaints, assess breaches of duty, and award compensation underscores its importance in maintaining trust in financial services.

Despite its strengths, AFCA’s ‘but for’ compensation approach has drawn criticism from financial advisers and industry bodies. Concerns include the theoretical nature of loss calculations, perceived inconsistencies in methodology, and potential financial strain on advisers due to obligations under the Compensation Scheme of Last Resort (CSLR). These debates highlight the ongoing tension between consumer protection and ensuring fairness to advice professionals.

As financial advice continues to evolve, AFCA’s role will remain critical in balancing consumer rights with industry sustainability. Calls for greater transparency and reform in AFCA’s methodology may lead to refinements in its approach. Ultimately, the effectiveness of AFCA will depend on its ability to maintain fairness, clarity, and confidence in its dispute resolution framework while addressing industry concerns.

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References:
[1] https://www.allens.com.au/insights-news/insights/2018/07/unravelled-australian-financial-complaints-authority-a/
[2] https://www.afca.org.au/news/latest-news/afcas-compensation-caps-and-monetary-limits-adjusted
[3] https://www.afca.org.au/what-to-expect/the-process-we-follow
[4] https://www.afca.org.au/news/media-releases/federal-court-reaffirms-financial-firms-must-co-operate-with-afca
[5] https://www.afca.org.au/members/news/changes-to-afcas-fees-and-charges-in-fy25
[6] https://www.afca.org.au/members/funding-model/fee-structure
[7] https://www.afca.org.au/members/news/changes-to-afcas-fees-and-charges-in-fy25
[8] https://www.afca.org.au/annual-review-investments-and-advice-complaints
[9] Ibid.
[10] https://www.afca.org.au/annual-review-year-at-a-glance
[11] https://www.afca.org.au/media/402/download
[12] https://www.ifa.com.au/news/35424-siaa-puts-the-magnifying-glass-on-afca-methodology
[13] Ibid.
[14] https://www.ifa.com.au/news/35328-jones-and-howarth-agree-but-for-test-has-no-place-in-cslr-scheme
[15] https://www.ifa.com.au/news/35469-complete-lack-of-diversification-afca-says-advisers-not-being-blamed-for-product-failures
[16] Ibid.
[17] https://www.professionalplanner.com.au/2023/06/afca-defends-use-of-discretion-to-hear-complaints-from-wholesale-investors/

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David Sharpe

Early Bird pricing for the second annual Financial Advice Association Australia (FAAA) Congress will finish on 30 September.

The Congress, to be held in Brisbane from 27 to 29 November, will have the theme “Power Up” and feature a comprehensive agenda of technical workshops and specialist sessions designed for all participants in the financial planning profession.

Members can currently take advantage of an early bird price of $1,210 before the end of the month, and non-members pay $1,995.

Delegates will be able to earn up to 13 CPD hours at the event, going up to 34 hours with exclusive post-event video content.

David Sharpe, chair of the FAAA, says the event will give delegates invaluable insights into the latest developments in the profession, as well as practical ideas and tools to support them into their work with clients.

“Financial planning is an ever-changing and ever-challenging profession, and the Congress is designed to help advisers not only manage these changes, but grow and succeed with them.

“With an FAAA practitioner membership costing just $595, this means becoming a member will more than cover the difference in a ticket to Congress.

“Aside from the formal sessions, where I often find the most value is the opportunities to network with colleagues, whether that be during the breaks or around the sponsor stalls. I’ve found members are always willing to share their successes and failures. We have an amazing generosity of spirit in financial advice and Congress provides the largest opportunity each year to share with your peers from right around the country,” Mr Sharpe says.

Sessions will include:

• Regulatory, policy and advocacy update with ASIC’s Alan Kirkland and Leann King from AUSTRAC, along with the FAAA’s general manager – policy, advocacy & standards Phil Anderson, and senior manager – government relations and policy George John.
• The crucial art of scoping advice in a post DBFO world​ with Cheyenne Walker from Australian Independent Compliance Solutions​.
• Leadership Matters with Peter Baines OAM.
• Mind the Gap in Navigating Diminished Capacity with Rhett Das from Integrity Compliance, Ann Janssen from QLD Law Society, Simone O’Hara from RI Advice Moreton, and psychiatrist Angus Finlay.

In addition, the third Plenary session has been confirmed, focusing on the actions advisers can take now in advance of legislative reform to move ahead and enhance their client’s experience of financial advice.

Ahead of tranche 2 of the Delivering Better Financial Outcomes reform, including implications for the consolidation of advice documents, this session will look at how practitioners can deliver advice efficiently, compliantly, and effectively.

Speakers will include Shail Singh (Lead Ombudsman Investment & Advice, AFCA) as well as a panel of industry experts in compliance and advice, and will explore key questions such as:

• What do clients want to see in the delivery of advice and their advice documents?
• How can clients better understand the advice and how can they be empowered to take action to implement the recommended financial advice?
• How can advisers simplify their advice process and documents (i.e. SoAs that are concise, “fit for purpose” advice records)?
• What will the client file look like, and what needs to be considered to ensure the compliance elements needed for advice to be defendable are included?

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The AFCA board confirmed his appointment after a competitive selection process. Mr Singh had been acting in the role.

“Shail brings deep and diverse experience to this role, having worked in dispute resolution for over a decade and having been a financial planner himself,” AFCA’s Deputy Chief Ombudsman Dr June Smith said.

“He is a respected specialist in investments and advice complaints, in areas such as financial planning, derivatives, managed funds, timeshare, cryptocurrency and stockbroking.

“Shail has forged strong relationships with key stakeholders, among other things initiating a financial advice liaison group and a cryptocurrency liaison group,” Dr Smith noted.

Mr Singh is a lawyer by profession and worked both as an in-house legal counsel and for regulators including WorkSafe Victoria and the Medical Practitioners Board of Victoria. He then trained and worked as a financial planner before becoming a case manager with an AFCA predecessor, the Financial Ombudsman Scheme, in 2010. He was appointed as an Ombudsman when AFCA opened its doors in November 2018, becoming Senior Ombudsman, Investments and Advice, in 2021.

He stepped in as acting Lead Ombudsman in January 2022 when his predecessor, Natalie Cameron, became Lead Ombudsman for Banking and Finance.

“I’m extremely excited to be appointed to this role,” Mr Singh said. “I’m looking forward to continuing my work with firms to prevent disputes, and to being involved in improving our systems and processes to deliver an even better dispute resolution service that is transparent, timely, efficient and above all fair.”

AFCA is the ombudsman service for the financial services sector, handling complaints in four areas: banking and finance, investments and advice, insurance, and superannuation. In addition, a dedicated small business ombudsman oversees complaints from small business.

The five lead ombudsmen are responsible for AFCA’s approach to decision making in their respective areas. Together they head teams totalling more than 100 ombudsmen and adjudication panel members. AFCA’s other Lead Ombudsmen are Natalie Cameron (Banking and Finance), Suanne Russell (Small Business), Emma Curtis (Insurance) and Heather Gray (Superannuation).

AFCA is on track to register about 100,000 complaints in the 2022-23 financial year and has secured $1 billion for complainants since inception in November 2018.

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John Maroney

Allens partner and superannuation law expert Michelle Levy, who is heading the Quality of Advice Review with Treasury, will join a panel dissecting Quality of Advice at the SMSF Association Technical Summit being held on 27-28 July on the Gold Coast.

Levy will be one of five speakers on the Breakfast Panel discussing the topic, “Quality of Advice – A new horizon”. The other speakers will be BT Financial Group Head of Financial Literacy & Advocacy, Bryan Ashenden, FPA Chief Executive Officer, Sarah Abood, AFCA Acting Leading Ombudsman, Investments and Advice, Shail Singh, and Institute of Public Accountants Group Executive, Advocacy & Policy, Vicki Stylianou.

SMSF Association CEO John Maroney says: “The panel will examine what the quality and affordability of advice will look like in the future. It will also provide an opportunity for the industry to collaborate on proposed practical solutions to remove complexity and lower costs.”

One session certain to attract strong attention will focus on how advisers can take better care of their mental health and emotional well-being.

To be run by Artemis Investments Director Philippa Hunt, this session takes on special relevance for many delegates in the wake of a recent survey of 700 financial advisers that showed more than 50% of respondents had suffered a significant decline in their mental health since the Royal Commission and subsequent legislation.

Maroney says: “The survey returned quantitative results and anecdotal evidence of widespread issues with mental health across the industry.  This session will identify aspects of mental health and emotional well-being, how to recognise undue stress and when to take action to alleviate it. “

Another session with three SMSF specialists will use a case study to bring to life the “superannuation life cycle” of a professional surfer, from setting up her SMSF in her 20s to her final wipe-out in her late 70s.

SuperConcepts’ Graeme Colley will be the session narrator and client adviser whose decisions and documentation will be critically reviewed by the fund auditor, ASF Audits’ Shelley Banton. The third actor in this compelling drama will be the client’s lawyer, Coleman Greig Lawyers’ Peter Bobbin, who will provide a risk management overlay from both a client and adviser perspective.

“We’re always looking for fresh ways to give the sessions ‘a practical bent’ by creating life-like client situations to make them more compelling listening as well as stimulating delegate participation.

“With this session I believe the organisers have scored the perfect 10 by offering a documented history of a female surfer’s super life cycle, beginning with a ripple then moving on to a gnarly ride before she rides off into the sunset.

“It’s a case study that will consider the importance of documentation from different perspectives, including the client, accountant, auditor and lawyer, as delegates follow her wild ride from setting up the fund to admitting new members to the ongoing acceptance of the annual fund accounts and its final winding up.”

Cryptocurrencies will also come under the spotlight with ATO statistics showing this asset comprised $226 million of SMSF assets at 31 March 2022. RSM Director Katie Timms and Associate Director Tracey Dunn will explain the basics of blockchain, cryptocurrency and digital assets, the taxation treatment of digital assets, and sole purpose test considerations with non-fungible tokens and crypto wallets.

Register for the event.

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Natalie was appointed after an extensive executive recruitment process and moves into the position from her current appointment as Lead Ombudsman for Investments and Advice at AFCA. She has been acting in the Banking and Finance role since January.

“Natalie brings to this role a wealth of experience in law, financial services and dispute resolution. She has already made an outstanding contribution as a Lead Ombudsman, both in Investments and Advice and as Acting Lead Ombudsman in Banking and Finance,” AFCA’s Chief Ombudsman and CEO, David Locke, said.

“Natalie has a passion for access to justice and delivering fair outcomes for both consumers and financial firms. She is a highly capable lawyer and she has an open and collaborative leadership style. She has already demonstrated that she can build strong relationships with both industry bodies and consumer organisations, and that she can make sound, impartial decisions without fear or favour.”

Lead Ombudsman for Banking and Finance is a key national role, with more than half of the 70,000-plus complaints AFCA registers each year coming from this sector, Mr Locke said. “Natalie will have the opportunity to influence practice by working with banks and financial institutions in areas such as financial difficulty and vulnerable customers,” he said.

Natalie Cameron said: “It is an honour to continue AFCA’s critical work helping consumers and financial firms to resolve disputes. Finding ways to bring fair and efficient resolution to disputes could not be more important in a changing banking and finance environment.

“As well as leading AFCA’s approach to complaints handling and decision-making in banking and finance, I look forward to ongoing engagement with the sector to help build on their positive work to prevent complaints arising.”

Natalie takes up the permanent appointment effective immediately.

Meanwhile, Shail Singh will continue as Acting Lead Ombudsman, Investments and Advice, for the coming 12 months, having taken on this role earlier this year, Deputy Chief Ombudsman Dr June Smith said.

“Shail will continue acting in this role in a year when we are likely to see the implementation of a compensation scheme of last resort and the outcomes of the Quality of Advice review.”

AFCA has five Lead Ombudsmen, in Banking and Finance, Investments and Advice, Insurance, Small Business and Superannuation. “Their leadership underpins our independent, fair and consistent approach to the resolution of complaints between consumers and financial firms,” Dr Smith said.

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The new Senior Ombudsmen will work closely with AFCA’s Lead Ombudsmen in the areas of banking and finance, insurance, investments and advice, and superannuation.

“They’ll bring their specialist technical and professional expertise to bear on projects aimed at efficient and consistent decision making, which we know is important to both complainants and financial firms,” Deputy Chief Ombudsman June Smith said. “The Senior Ombudsman will help ensure we deliver an independent, fair and consistent approach to decision making and complaint resolution.”

Projects include developing new and revised ‘AFCA Approaches’^[1] in consultation with stakeholders. These documents outline how AFCA approaches certain types of financial complaint and draw on the experience of Ombudsmen in resolving complaints.

The Senior Ombudsmen will be part of the leadership team in AFCA’s Decision Makers group, which totals more than 80 ombudsmen and adjudication panel members.

While the vast majority of the 70,000-plus complaints escalated to AFCA annually are resolved by helping complainants and financial firms reach agreement, around 5,000 cases need the more formal input of a decision maker such as an Ombudsman or Adjudicator.

The new appointments, all internal promotions, are:

• Anne Maree Howley, Senior Ombudsman, Superannuation
• Chris Liamos, Senior Ombudsman General Insurance
• Louise McAuliffe, Senior Ombudsman, Credit
• Shail Singh, Senior Ombudsman, Investments and Advice
• Neva Skilton, Senior Ombudsman, Transactions
• Brenda Staggs, Senior Ombudsman, Financial Difficulty
• Andrew Weinmann, Senior Ombudsman, Life Insurance

Biographies

Anne Maree Howley, Senior Ombudsman, Superannuation
Anne Maree has extensive experience as a financial services lawyer, including in-house legal roles in superannuation and life insurance companies and working as a solicitor with a top-tier law firm. She has also served on a number of trustee committees.

Chris Liamos, Senior Ombudsman General Insurance
Chris has been with AFCA and its predecessor schemes since 2007, holding case management, jurisdictional, adjudicator and legal counsel roles. Chris has a double degree in law and science and worked extensively in the insurance sector previously.

Louise McAuliffe, Senior Ombudsman, Credit
Louise has extensive experience as a banking and finance lawyer and has held senior roles in corporate and private practice, including at partner level. She was most recently Head of Legal, Dispute Resolution Group, at ANZ.

Shail Singh, Senior Ombudsman, Investments and Advice
Shail has worked in dispute resolution for over a decade. A former financial planner and legal counsel, he has significant experience dealing with financial planning, investments, stockbroking, contracts for difference and foreign exchange disputes.

Neva Skilton, Senior Ombudsman, Transactions
Neva joined the Financial Ombudsman Service in 2012, becoming an Ombudsman in 2019. She has significant experience investigating complex banking disputes but has a particular interest in unauthorised transactions. In private practice she specialised in general insurance law.

Brenda Staggs, Senior Ombudsman, Financial Difficulty
Before joining AFCA, Brenda practised as a lawyer for 18 years, in-house, in private practice and in the social justice sector, specialising in insurance and financial services. She has worked in major law firms, with the Redfern Legal Centre and with Legal Aid NSW.

Andrew Weinmann, Senior Ombudsman, Life Insurance
Andrew became a financial ombudsman in 2017 after 15 years in practice with major law firms, including as national head of superannuation and insurance at Slater and Gordon. Andrew has a long record of service with not-for-profits and community legal centres.

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[1] https://australianfinancialcomplaintsauthority.cmail20.com/t/d-l-atrvit-tdlthkulq-r/

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Natalie Cameron

Consumers who believe they’ve been given inappropriate advice or advice not in their best interest account for one in four Investments and Advice complaints but most of these complaints are resolved by agreement or do not go any further, data released by the Australian Financial Complaints Authority (AFCA) shows.

Since AFCA’s inception in November 2018, it has received 11,355 Investments and Advice complaints. The ombudsman service says 2,788 of these fell into two categories that could be regarded as “know your client” issues: claims of inappropriate advice or failure to act in the client’s best interest.

Of the 2,252 complaints that had been closed, 40 per cent were resolved by agreement at an early stage, after AFCA brought the parties together, the data shows. A further 24 per cent were assessed as falling outside AFCA’s Rules, meaning they went no further.

Only 15 per cent of complaints went on to be the subject of a decision in favour of the complainant at the “preliminary assessment” or final determination phase.

The bottom line is that 333 complaints of this type – just 3 per cent of all Investments and Advice complaints since AFCA opened its doors – resulted in a decision against a financial adviser, Lead Ombudsman for Investments and Advice, Natalie Cameron, said.

“The average adviser has little chance of ever having an AFCA decision against them,” Ms Cameron said, noting though that AFCA’s work helps the industry by tackling the behaviour of the small number of advisers who harm the sector’s reputation.

“At AFCA, we take every opportunity to secure a resolution that’s fair for both parties,” she said. “If we can bring the parties together so they reach agreement themselves, then that’s the ideal outcome for us.”

AFCA uses both informal and formal methods to secure resolution of a dispute. First, it refers complaints back to the financial firm to see if the firm can resolve the issue directly. AFCA then seeks to help the parties reach agreement through negotiation and conciliation. Next, it can provide a preliminary assessment of the merits of a complaint for the parties to consider. If there is still no resolution, the final step is for AFCA to make a binding decision, also known as a determination.

While most advisers get it right most of the time, there are still lessons to be learned from the cases handled by AFCA.

AFCA’s Senior Ombudsman for Investments and Advice, Shail Singh, said it was always good to see documents that had been tailored to a client’s financial literacy – such as clear, concise and effective statements of advice that use everyday language in setting out goals and strategy.

He recommends checking that all templated forms and documents are appropriate to the client in this way.

“It’s difficult for us to be convinced an adviser has selected the right strategies and financial products for a client, or even if they have, that they have adequately conveyed this to a client if documents contain pro forma jargon, complex concepts or excessive amounts of irrelevant material,” he said.

Mr Singh also highlighted the value of being able to provide documents created at the same time as advice when addressing a complaint. “These usually carry more weight than later recollections of what was said or done,” he says.

AFCA shares complaints data publicly via the AFCA Datacube.

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