AFCA is consulting on a draft investments and advice related Approach document: the AFCA Approach to determining compensation in complaints involving Financial Advisers and Managed Investment Schemes.

The public consultation will run from Monday 6 November 2023 until Friday 1 December 2023.

We invite stakeholders to provide comments or make a submission during this time. 

About the Approach

AFCA’s Approach documents help complainants and financial firms better understand how AFCA might approach some common issues and complaint types, and how we reach decisions. 

The AFCA Approach to determining compensation in complaints involving Financial Advisers and Managed Investment Schemes sets out how AFCA considers:

• liability and compensation in relation to financial advice firms and Responsible Entities (REs) where the advice firm has provided advice on interests in a Managed Investment Scheme (MIS) including those MIS that have subsequently failed or become insolvent,
• proportionate liability statutes in relation to complaints involving financial advisers and Managed Investment Schemes,
• its powers to join a party to a complaint if the party is an AFCA member, and
• fairness when apportioning loss in these complaints.

While the Approach document is new, the way AFCA handles these types of complaints, and assigns appropriate liability in multi-party investment and advice complaints, is not. Historically, this is how we have handled questions of liability when handling these complaints. 

The new Approach document simply explains our existing procedure, and the principles we may have regard to – such as proportionate liability statutes – when making decisions, apportioning liability and awarding compensation for a loss in investment and advice complaints. 

Formalising and publishing our Approach document will support complainants and financial firms to better understand how we consider investment and advice complaints involving financial advisers and Managed Investment Schemes and assist in efficiently and effectively resolving these disputes. It will also ensure AFCA’s approach to these matters is consistently applied by case managers and decision makers. 

Consultation period

AFCA is seeking feedback from affected stakeholders and interested members of the Australian community about the draft Approach document through a public consultation process. The draft Approach is available for review below.

The public consultation process will run from Monday 6 November 2023 until Friday 1 December 2023. The Approach for consultation is in a draft form. AFCA will consider feedback from all stakeholders before finalising the Approach.

Providing feedback

AFCA invites all stakeholders to provide feedback or make a submission through one of the following channels:

• email general questions and comments to us at consultation@afca.org.au
• send us a written submission by emailing consultation@afca.org.au
• post/mail us a written submission addressed to:
  
  Lead Ombudsman – Investments and Advice
  Australian Financial Complaints Authority
  GPO Box 3
  Melbourne VIC 3001

AFCA will also meet with directly impacted stakeholders and will take feedback during these engagements.

Consultation timeline