‘No blanket rule’ in assessing large-scale advice complaints

The Australian Financial Complaints Authority (AFCA) has detailed how it deals with systemic issues, known as batch matters.

Dixon Advisory is an example of what AFCA considers to be a batch matter due to the sheer volume of complaints lodged against the financial firm. More than 2,700 complaints were filed against the provider and its membership was eventually ceased in June 2024 to prevent any further complaints being made.

AFCA stated earlier this week that only 128 of these 2,773 complaints have been closed so far since AFCA's inception in 2018.

Speaking at a recent AFCA member forum session, Eunice Sim, senior manager for investments and advice, described how batches are systemic in nature and require closer attention from AFCA to work through the larger number of complaints made against a specific financial entity.

She said: “We use the term ‘batch’ quite often at AFCA. It’s an informal process which we adopt to ensure consistency and efficiency.

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“We identify groups of complaints, often against one financial firm or a particular issue, that is uncommon and requires closer management and centralised communications plans. We may identify that there’s a group of complaints that involve the same adviser or a particular issue that needs to be grouped together and managed together as a batch to ensure the approach is consistent and that we are maximising the efficiency on how we deal with those complaints.”

AFCA typically allocates an internal decision-maker resource to the batch early on, meaning a specialist level of expertise is examining the group of complaints.

It previously detailed in February 2024 that it had “accelerated” processing complaints of Dixon by doubling the size of its investment and advice decision-making team and increasing its case management workforce.

Alexandra Sidoti, senior ombudsman at AFCA, said: “That decision-maker won’t be speaking to the financial firm or speaking to the complainants. They’ll be there to support case management and to ensure that there’s consistency across the batch, helping to make sure that the issues are being correctly identified and framed from the outset.”

In the advice sector, batches often emerge against one particular adviser at a financial firm who has delivered the same advice to a group of clients. While the advice itself could be conflicted, determinations may differ depending on the specific circumstances of each client.

Sidoti continued: “You’ve got consistency in the advice that’s being provided, but the individual circumstances of each client are still going to be different. So we’ll see themes that we have treated consistently, but it’s still going to have to be a case-by-case determination.”

Also appearing at the member forum session, Patrick Hartney, ombudsman at AFCA, further explained why AFCA needs to investigate each case on its own merits despite the fact that the same advice may have been provided across multiple complainants.

“In advice complaints, even with a cookie-cutter advice approach from an adviser that may have done the wrong thing, the application and implications of that can differ from complainant to complainant,” he said.

“It may actually have been appropriate for one or two people. It’s not just a blanket rule that this one piece of advice is bad and it’s bad for everyone. There could be certain people where it could be okay for, or in other cases, there may not have been a loss for example.”

The session identified one particular Dixon case where despite the conflicted advice model that the firm was operating under, one complainant did not experience any financial loss due to their specific circumstances. Therefore, they were “actually better off with the conflicted advice from a result perspective”, Hartney said.