SMSFs accounted for a third of all investments and advice complaints in the 2024–25 financial year, according to the Australian Financial Complaints Authority (AFCA).
Complaints involving SMSFs hit 1,323 for the year and were up 95 per cent compared with FY24.
Investment and advice complaints more broadly rose 18 per cent, which AFCA attributed to a string of failures, including United Global Capital, Shield Master Fund, First Guardian Master Fund, and Brite Advisors.
Complaints alleging failure to act in the client’s best interest also rose significantly, jumping 124 per cent to 1,266.
“What we’re seeing in complaints is 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,” chief ombudsman and chief executive officer David Locke said.
“This only highlights the need for the Compensation Scheme of Last Resort for victims of unlawful advice.”
Across the entire AFCA landscape, there was a 4 per cent decline in complaints, dipping from a record 104,861 complaints in FY24 to 100,745, however Locke said this figure is still far too high.
“The movement is in the right direction, but receiving 100,000 complaints in a year is still unacceptably high,” he said.
“We’ve now had three years of high complaints. Firms have more work to do to ensure fair responses to complaints are delivered earlier, without people having to take the extra step of coming to us.”
AFCA’s preliminary data snapshot as at 30 June showed that banking and finance complaints were down 9 per cent to 54,581, superannuation complaints dropped 16 per cent to 6,164, while general insurance complaints increased 17 per cent to 34,231, and life insurance saw a 5 per cent uptick in complaints to 1,518.
The complaints authority added that a significant reduction in scam-related complaints, down 45 per cent to 5,977, was contributing to the overall fall in banking and finance complaints.
“Whilst any decline is positive and we welcome the progress made by government and industry to prevent scams, caution should be exercised in interpreting AFCA’s scam numbers,” Locke said.
“AFCA currently only sees a small proportion of scam complaints, and towards the end of the financial year we saw an uptick in some scam types that cause great harm. The number of scam cases are far too high and behind every case is a consumer who has been traumatised and often suffered life changing impacts.
“We urgently need mandatory industry codes and further action from all to prevent, protect and respond to scams. This evil trade causes so much human harm, and the law and regulatory framework we currently have is not sufficient to address this. Industry should not wait to take action; every day we see the impact of more people affected.”
Personal transaction accounts, motor vehicle insurance, and credit cards were the three most complained about financial products overall in 2024–25, while the top three issues were misleading product or service information, delay in insurance claim handling, and service quality.
Locke also welcomed an improvement in claim handling by superannuation funds, with complaints related to this falling 39 per cent in 2024–25.
“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.”
According to AFCA’s announcement, it has received around 570,000 complaints and secured $1.8 billion in compensation or refunds for consumers since its inception, while its systemic issues work has resulted in 5.4 million people receiving more than $392 million.
Soooo…. The unlawful advice relates to product failures but product manufacturers are exempt from the CSLR??
The advisers aren’t blameless in these dubious investment market failures but there seems to be a really common theme here in relation to product failures.