AFCA should not be key determinant of experienced adviser clean record
The Australian Financial Complaints Authority (AFCA) should not be a key determinant in whether financial advisers have a clean record for the purpose of the experience pathway because of the number of vexatious claims lodged against advice firms, according to the Association of Financial Advisers.
In its submission responding to the Treasury consultation around the experience pathway, the AFA also said it strongly opposed the inclusion of a continuing professional development (CPD) breach as grounds for excluding an existing adviser from the Experienced Adviser Pathway.
Dealing with the question of determining whether advisers had a clean record, the AFA said it was cautious about the use of adverse findings by AFCA.
“We are cautious about this as some complaints are vexatious, and the licensee may have settled a matter to avoid the cost of fighting,” the submission said. “Also, and very importantly, how and where is the line drawn in terms of assessing the severity?”
“It is also important to ensure that there is adequate delineation between a complaint that is attributable to a licensee process or policy, versus individual adviser actions,” it said. “
“We also have reservations as to whether an AFCA decision, which is not a disciplinary matter and is not subject to appeal, should be used for this purpose. It may also be the case that the complaint was received after the adviser left the licensee and was not given the option to defend their actions.”
The AFA said it strongly opposed the inclusion of CPD breaches as grounds to exclude existing advisers because a CPD breach because they were mostly administrative.
“Firstly, a CPD breach could come for a failure to achieve the target for one of the categories (i.e. nine hours of professionalism and ethics), despite achieving the overall 40 CPD hours target. Such matters are more administrative, and do not hit the required misconduct threshold,” it said.
“Beyond that it gets too arbitrary as to what level of non-compliance with the CPD standard would warrant such action, and then there would need to be consideration of the cause, such as health, natural disaster or family tragedy reasons.”
The submission also suggested that disciplinary action taken by professional associated would be a doubtful determinant in circumstances where advisers who are not members of the association are not exposed to risk.
It said that proving that someone has a clean record would be a difficult task, “and the onus should not be on an adviser to prove that they have a clean record, but instead on someone else to prove that they do not have a clean record”.
“In most cases they should know if there is an issue with their record, however an adviser may not have been informed where they were the subject of a significant breach report, or if a complaint against them went to either AFCA or ASIC (if they were a former employee adviser).”
once again witness the death of common sense…this ones easy…just set the bar at a reasonable level…if they have ever been banned, found guilty of any criminal offences or had more than say 3 advice related complaints successfully upheld against them in any say 10 year period?! Right something like this means small once off infractions of minor impact don’t adversely affect an adviser. I’ve seen plenty of greedy customers take minor complaints to AFCA and its predecessor becasue they know there is no cost and the parties are likely to want to settle