Ten facts you should know about complaint resolution

In any service industry there will always be those who feel they have a need to complain. However while complaints are not exactly the most celebrated yardstick for success, they do serve as a useful reminder of the areas of weakness in which the industry can improve.

The Financial Industry Complaints Service (FICS) is the peak body for complaint resolution for the financial planning industry. It also covers complaints relating to share brokers, life insurers and fund managers.

In January 2000, the FICS was integrated with the Financial Services Complaints Resolution Scheme, formerly the complaints resolution scheme of the Financial Planning Association (FPA).

The big news is that by the end of this year, it is expected that the number of new complaints relating to the financial planning industry and to be received by FICS will be double the number received last year — a fact that is a little startling.

It is not surprising given that new legislation requires licensees to join an independent scheme approved by the Australian Investment and Securities Commission (ASIC). So more members of such schemes mean the likelihood of the FICS being aware of complaints is higher.

Further, a greater awareness of the service by consumers increases the opportunity for them to register their complaint. However, the startling aspect of this news is that financial planning related complaints are the biggest growth area in new complaints lodged with the FICS.

That is, the number of complaints relating to the financial planning industry registered with the FICS last year was 83 or 10 per cent of the total complaints received by the FICS. In September this year, already 138 new complaints have been received.

According to FICS chief executive Alison Maynard, by the time the year is out, she expects this to be double last year’s figure.

“I don’t think planners are doing worse. I just think people are becoming more aware,” Maynard says.

So how does the FICS work and what do you need to know about this service that may be responsible for overseeing a complaint against you?

Ten facts you need to know about the FICS:

Fact 1—The user pays.FICS is funded by a combination of fees and levies with a fee per complaint and additional fees on top of this if a complaint goes through to an adjudicator or panel.

Maynard says roughly 55 per cent of FIC’s budget derives from levies and 45per cent from fees and for most cases is a flat rate of $330.

Fact 2—Life insurance dominates.Last year, approximately 75 to 80 per cent of the total number of complaints received by FICS, were life insurance related.

Maynard says these complaints are mostly over whether a claim is payable or not, with reference to a medical assessment or policy definition, or relating to non-disclosure.

Fact 3—Everyone is a member.While in February this year, ASIC reported more than 100 financial advisers had failed to join a consumer complaints resolution scheme as a condition of their licence agreement, Maynard estimates the service currently has maximum coverage.

Fact 4 — Inappropriate advice rules. “Inappropriate advice will always be the top category because of the nature of the complaints we receive,” Maynard says, estimating that it accounts for 60 per cent of cases.

She says in the case of investment performance, while people are unable to lodge a complaint to FICS specifically over performance, they can argue inappropriate advice led to the disappointing performance results.

Fact 5—Settlement takes a while.Complaints made to FICS are resolved by investigation, negotiation, conciliation and arbitration. Most cases (estimated at around 80 per cent of total complaints) are resolved with the assistance of a case manager and takes between two and three months. If it is not successful, the case is then referred to an adjudicator level where it can take up to six months. Maynard considers these time frames are way too long. However she notes that parties are given time to respond to submissions, all correspondence and at any time, may ask for further information, so it is understandable why it can take this long.

Fact 6—The word is out.Promotion of the FICS is mostly through forums where those people that are invited, represent consumers. Presentations, talking to the media and a Web site presence also help.

Fact 7—Some complaints are out of bounds.FICS does receive some complaints outside its jurisdiction. This includes such things as performance results. However, Maynard says they do not receive too many because people must have first gone through the complaints area of their financial planner.

Also, case managers generally deal with cases if they are complex or are over $10,000. If less than $10,000, the case will go to an adjudicator. The FICS limit of $100,000 pushes complaints seeking higher amounts into the litigation arena.

Fact 8—More members will join.As far as expanding the service in the future, Maynard says there will be some groups not apparent at the moment that, due to legislation, will need to join. She mentions some charities may become members.

Fact 9—FICS staff go broad.FICS employs 15 staff, 14 full-time and 1 part-time. Maynard says there is no specialisation in the service, so all employees handle the entire range of complaints from all the categories the service covers.

Fact 10—Alternative dispute resolution is here to stay.“I believe we have a good reputation with members and the community,” Maynard says. “We do work hard at this.”

She considers the fact that alternative dispute resolution is now a field of practice in its own right, that this is a positive development for the consumer.