The Financial Advice Association of Australia (FAAA) is calling for the Australian Financial Complaint Authority (AFCA) to change its rules to allow a complaint against a superannuation fund to be made in an easier fashion.
To this end FAAA general manager policy, advocacy and standards Phil Anderson pointed out AFCA Rule C.1.5 specifically excludes ‘A complaint relating to the management of a fund or scheme as a whole’.
“We have already seen complaints against super funds rejected on the grounds that a complaint about the inclusion of a questionable managed investment scheme on a fund’s investment menu is considered to be a complaint against the fund as a whole. We are calling this out and asking for the AFCA Rules to be changed to give impacted clients a better chance to make a complaint against a super fund,” Anderson said.
While welcoming the recent Shield Master Fund outcome with the Australian Securities and Investments Commission (ASIC) and Macquarie, which will see individuals who suffered losses as a result of investing in the product reimbursed, he noted the outcome for other impacted clients was less certain.
“The complaints regime needs to change to ensure that consumers have fair access to recourse, rather than an incentive to complain against financial advice, which is an easier pathway and one which seems to be promoted as the most likely prospect,” he explained.
Even if impacted clients lodge complaints against financial advice with the Compensation Scheme of Last Resort (CLSR), the limit on compensation payments is $150,000.
“For many of these clients, they have lost a lot more. The CSLR should be the last option, not the only option. The complaints regime must be fit for purpose,” Anderson suggested.
Further the Shield and First Guardian Master Fund failures has seen the Financial Services Council (FSC) begin to develop clear industry guidance to support platform trustees in meeting their investment governance obligations when operating a superannuation platform.
“This is likely to include practical examples of red flags for trustees to consider when determining whether to add a product to their menu and best practice guidance on ongoing monitoring of investment options,” FSC chief executive Blake Briggs revealed.
The FSC’s announcement follows a letter from the Australian Prudential Regulation Authority (APRA) to superannuation trustees calling on them to “accelerate and escalate efforts to safeguard members’ investments held in platform products.”
