The Financial Ombudsman Service (FOS) recorded a 55 per cent rise in financial planning disputes in the first half of 2008, highlighting the impact of the global financial crisis.
In its first annual review of disputes across the financial services sector for the financial year ended June 30, 2008, FOS reported substantial increases in financial planning and managed investments disputes – part of the investments, life insurance and superannuation division.
The division experienced an increase of 33 per cent in new cases over the six- month period from January 1, 2008 to June 30, 2008.
“There has been a considerable increase of 152 per cent in disputes about managed investments and a 55 per cent rise in financial planning disputes, involving allegations of inappropriate advice and standard of service,” says Colin Neave, chief ombudsman.
Of the 739 new cases recorded by the investments, life insurance and superannuation division, 257 cases related to financial planning while 126 cases related to managed investments.
The number of life insurance complaints rose only 9 per cent to 202 cases, while stockbroking complaints fell 23 per cent to 78 cases.
Within financial planning and managed investments, the main areas for disputes were: inappropriate advice; standard of service; misrepresentation; and redemption delay.
Alison Maynard, ombudsman – investments, life insurance and superannuation, says: “We are seeing a significant increase in disputes in the areas most affected by overall economic conditions. Volatile market conditions and falls in the value of investments will reveal inappropriate advice and highlight service and administration issues.”
Overall, FOS reported an average 22.8 per cent increase in the number of new disputes received in the financial year ending June 30, 2008.
