The Shield and First Guardian failures have pushed annual advice complaints up for the first time in years after the profession was seeing declines, according to the latest complaints figures from the Australian Financial Complaints Authority.
Investment and advice complaints rose 18 per cent to 4193 due to a raft of new high-profile failures including Shield, First Guardian, United Global Capital and Brite Advisors.
Additionally, there was a 95 per cent rise in complaints involving SMSFs (up to 1323), which accounted for a third of complaints in the sector. Complaints alleging failure to act in the client’s best interest rose 124 per cent to 1266.
The authority released preliminary data with full data to be made available during the annual review later in the year, but the rise comes after years of reductions in advice complaints.
The downward trend began in FY21 with a 33 per cent drop in advice complaints, which halved again the following financial year.
Advice complaints rose again due to Dixon Advisory, while the industry continued to otherwise trend downward when the “black swan” event was excluded.
In a media statement, AFCA chief executive and chief ombudsman David Locke said the complaints showed a clear pattern of conflicted advice models and the inappropriate use of self-managed super funds that ultimately isn’t in the customer’s best interest.
“This only highlights the need for the Compensation Scheme of Last Resort for victims of unlawful advice,” Locke said.
Advice complaints about Shield and First Guardian are required to come through the licensees, Interprac, FGSA, Next Generation Advice and MWL Financial Services.
Next Gen and FSGA had their licenses cancelled by ASIC, meaning they will remain AFCA members until 17 October 2025 and 4 June 2026, respectively.
ASIC was concerned that UGC representatives gave conflicted personal advice to clients, including to set up an SMSF to invest in high-risk products related to the firm’s director Joel Hewish, despite UGC advisers telling clients they were not receiving personal financial product advice.
ASIC has banned UGC’s licence and AFCA has been unable to accept new UGC complaints since June.
Brite Advisors is an overseas pension transfer company whose AFSL was cancelled by ASIC in April, but is required to remain an AFCA member for another 12 months and can continue to accept complaints until then.
Superannuation complaints were down 16 per cent to 6164 complaints, despite major incidents in the past year over claims handling issues with major super funds including Cbus, AustralianSuper, Australian Retirement Trust and an overall negative report from ASIC outlining the industry’s shortcomings.
Locke cautiously welcomed an improvement in claim handling by superannuation funds, with complaints about delays in claim handling falling 39 per cent in FY25.
“The reduction in superannuation complaints is a positive sign that improvements are being made, but we’re still concerned that the top three issues relate to service quality and we urge superannuation funds to improve service standards,” Locke said.
AFCA lead ombudsman for superannuation Heather Gray revealed the super numbers to executives of the country’s major super funds at the Investment Magazine Insurance in Super Summit yesterday.
“[Funds] have changed the way that they do things, they’ve increased resources, they’ve moved activity centres and things are definitely improved,” Gray said.
The summit also heard that improving claims handling is still a core enforcement priority for ASIC.
AFCA has received more than 100,000 complaints for the second year in a row, although there was a 4 per cent decline from 104,861 in FY24 to 100,745 in FY25.
AFCA commenced operations in November 2018, combining several separate external dispute services, and has received around 570,000 complaints.
The authority has secured $1.8 billion in compensation or refunds for consumers.
AFCA’s systemic issues work, which focus on wider issues rather than single complaints, has resulted in 5.4 million people receiving more than $392 million in compensation.
The three most complained about financial products overall in the past financial year were personal transaction accounts, motor vehicle insurance and credit cards.
The top three issues were misleading product or service information, delay in insurance claim handling and service quality.
What an absolute joke! The three most complained about products have nothing to do with financial advisers, yet who funds the CSLR? How is this unfair impost on the profession allowed to continue?