The most common issue in investments and advice disputes lodged with the Financial Ombudsman Service (FOS) Australia in 2015-16 was inappropriate advice.
The FOS Annual Review showed that FOS accepted 1,141 investments and advice disputes (5% of overall disputes accepted) in 2015-16. Almost two-thirds of these disputes were about managed investments and superannuation.
The main investment product in dispute was mixed asset funds (multiple asset classes such as cash, bonds, shares and property), which were involved in 22% of investments and advice disputes. Inappropriate advice (28%) was the most common issue in investments and advice disputes.
Lead Ombudsman – Investments and Advice, June Smith, said many investors complained that the advice they received was not suitable for their goals, objectives or risk tolerance.
“We often also see that risks are not always adequately disclosed or explained to investors,” she said.
Life insurance disputes
FOS accepted 1,095 life insurance disputes in 2015-16. About half (49%) of these disputes involved income protection insurance.
Denial of claim (26%) was the most common reason consumers came to FOS with life insurance disputes.
Reducing dispute timeframes
The Annual Review showed that FOS has reduced the average time taken to resolve disputes by more than one-third without compromising the quality of outcomes.
FOS resolved disputes in an average of 62 days in 2015-16 compared with 95 days in 2014-15. It also closed 43% of disputes within 30 days (almost double last year’s 22%).
The improvements were due to FOS’s new dispute process, which was introduced on 1 July 2015 in response to the independent review of FOS conducted in 2013.
FOS fairly and independently resolves disputes between consumers and member financial services providers (FSPs).
The Annual Review shows that in 2015-16, FOS received 34,095 disputes, up 7% on the previous year. This was mainly due to a 19% increase in general insurance disputes received.
What the disputes were about
FOS accepted 20,298 disputes in 2015-16. Of these, there were:
• 10,438 credit disputes (47%)
• 6,858 general insurance disputes (31%)
• 1,546 deposit-taking disputes (7%)
• 1,163 payment system disputes (5%)
• 1,141 investments and advice disputes (5%)
• 1,095 life insurance disputes (5%)
Notes
1. The totals above are based on counting disputes that may involve multiple products/issues as single cases
2. Due to the changes we have made to our dispute resolution process, the number of disputes we accepted in 2015-16 cannot be directly compared with disputes accepted in previous years.
