The SMSF Association strongly supports the Australian Financial Complaints Authority’s (AFCA) proposal to publicise the failure of financial firms to comply with AFCA determinations.
“It’s something that we think is important. We think that unpaid determinations add directly to the cost of the Compensation Scheme of Last Resort (CSLR) and we certainly support more disclosure around that, more transparency around the firms that have these unpaid determinations,” SMSF Association chief executive Peter Burgess said.
Burgess was a signatory to a joint submission in response to the consultation paper on proposed amendments to the AFCA rules, along with Chartered Accountants Australia and New Zealand, CPA Australia, the Financial Advice Association Australia and the Institute of Public Accountants.
“We also support, and it was in the submission, once a firm hits a certain number of unpaid determinations, that firm is disclosed so that we can protect clients and we can protect the sector,” he said.
The associations outlined how the failure of financial firms to pay AFCA determinations, and the subsequent impact on the CSLR, is detrimental to the industry.
The signatories were also concerned to see 64 financial firms failed or refused on at least one occasion to give effect to an AFCA determination in the year to 31 March 2025.
“The cost of the CSLR is a major threat to the financial advice sector. We strongly support greater publicity with respect to those who fail to pay, enabling other participants in the financial services industry to see those entities that have contributed to the cost of the CSLR,” the joint submission said.
The parties to the joint submission said they would like to see the total number of unpaid determinations and amounts payable across all years reported at firm level for each relevant sector, preferably on a monthly basis.
“We consider it particularly unfair for clients of financial service providers who have been exposed to conduct that results in the award of a determination, who have needed to go through the full complaints process, and obtain a determination, to not end up getting paid,” the submission said.
