AFA acting chief executive Phil Anderson told sister brand ifa the design of AFCA as a free complaint service for consumers had generated “a lot of angst” among advice licensees, who were charged a fee for each stage of the complaints process.
“While the model for AFCA has been set by the government, it generates a lot of angst that consumers can complain at no cost and there’s nothing to prevent people who are frivolous from making complaints,” Mr Anderson said.
“Decisions are binding on the financial firm but not on the complainant, and there’s no mechanism to appeal decisions — there’s an independent assessor, but they can only make an assessment of the process and not the merits of the case.”
Mr Anderson said the association had put forward a number of suggestions to improve the balance of fairness in AFCA decision-making between consumers and financial firms in its submission to the Treasury’s independent review of the ombudsman’s operation.
The review, which is a requirement of the legislation that established AFCA, was announced by Financial Services Minister Jane Hume in February and closed its consultation with industry at the end of last month.
Mr Anderson said one of the AFA’s suggestions was that dispute resolution data among licensees should be tracked to determine what degree of complaints were settled with no admission of wrongdoing, as this could indicate firms were resolving what may be unfounded disputes out of commercial necessity.
“There should be some tracking of decisions that are purely commercial, because the cost of paying something out might be less than the cost of proceeding with the AFCA action,” he said.
“That will apply in certain types of matters — if you’re got a complaint that the client did not get adequate services for the fees they paid and it amounts to a few thousand [dollars], it may simply be that the cost of defending it is more than the cost of paying it out, even though you might feel the matter has no basis.
“We do hear about those cases, and we also get feedback that some licensees are reluctant to allow matters to go to a final determination where they can’t guarantee the outcome and the decisions are public.”
Sorry for your positions K-Roo and Darin as I have felt that pain too; Under the ombudsman also had to payout, even though my file notes and records proved my position. The licensee’s lawyer did nothing to counter the position and just encouraged a payment be made. The claim was the same as the xs on PI so a fat lot of good the insurer proved to be….Separate legal advice suggested going for the lawyer, but pockets were empty by then of course. How many layers of this is needed across everything we do and same old story just makes it all more expensive; kill AFCA and go to the legal system, if someone is serious enough and wants to chase it, then go fo it. If it was affordable to get out, I would.
One complaint in 22 years is more than enough. Having suffered the disgusting Kangaroo court grief of FOS and a vexatious complainer, who wasn’t even the client but a girlfriend of the client. FOS declined claim twice, nothing wrong with advice but she wouldn’t go away and a final determination found partially in their favour just to get rid of them. Payout $100k out of attempted $500k claim. Total BS.
FOS then Ombudsman personally called me and explained it was the worst case management she had ever seen from FOS to allow such vexatious claims. Yet sorry we have to find something to appease these claimants.
What a disgusting joke.
2 years of pain, higher PI, etc all because these vexatious claimants can just ignore FOS / AFCA rulings and at zero expense to themselves keep complaining until they get an effectively guaranteed win.
Ever heard of Natural Justice FOS / AFCA ? Nope.
Just prey you never get in front of AFCA, if you do settle as you will surely loose.
We had a complaint where in each step of the process, it was found it our favor (the Financial Firm).
Yet the complainant progressed it to the final stage, because there is no disincentive for the to not keep pushing.
End result, still found in our favor, yet we are left with a 10k+ bill from AFCA along with all the time lost in dealing with a vexatious claim that had no merit.