AIOFP still warning members on FPA disciplinary procedures
Despite a financial adviser being cleared twice by the Australian Financial Complaints Authority (AFCA) with respect to action brought by a client it still cost his practice around $100,000 in legal fees and professional indemnity insurance and he still has issues with the Financial Planning Association (FPA).
That is the message being delivered to members by the Association of Independently Owned Financial Professionals (AIOFP) as the FPA and the Association of Financial Advisers (AFA) move into the final stages of their merger proposal with AIOFP executive director, Peter Johnston claiming advisers should make themselves aware of the FPA’s disciplinary processes.
Johnston’s message to his organisation’s members claimed that while the adviser had received a favourable ruling from AFCA, the FPA had not altered its disciplinary decision with respect to the same issue.
“You may recall we sought legal advice on the FPA’s disciplinary process after some AIOFP members with either FPA or AFA membership were considering whether to join the proposed new FPA/AFA entity and sought our opinion and counsel,” he said.
“What members must be aware of is the FPA process has extraordinary powers that fall outside of AFCA, ASIC and the Supreme Court….in other words they can make their own determination despite any of these jurisdiction decisions.”
“What has also emerged out of this issue is AFCA taking on cases that fall outside of their jurisdiction. Despite the member being cleared twice by AFCA it still cost the practice around $100,000 in costs, legal fees and PI excess as well as years of mental torment to defend themselves over the journey.
“This is just so wrong from a number of perspectives and something needs to be done about it.”
“Lessons to be learnt –
- Have a real close look at this FPA disciplinary process before getting involved, as things stand all members of the new FPA/AFA entity will be subject to these conditions.
- We will be formally raising this AFCA jurisdiction matter with Minister Jones, surely it is time for their Independent Authority status to be held to account for decisions they make? Member Bill Mills suggested to Minister Jones at our recent December conference that ASIC should be involved with overseeing the AFCA decision making process, we fully support that notion.”
Unfortunately I have had 1 complaint in 24 years via a similar vexatious litigant and also was cleared / won in FOS (now AFCA) twice.
But that didn’t stop the vexatious litigant going back to FOS a third time and finally FOS found in their favour, 1/5 of what they claimed – as chief ombudsman told me “we just had to find a way to stop them complaining”.
FOS / AFCA is nothing more than a Kangaroo court way out of its depth in our crazily complex world of Advice laws and with eyes only for consumer wins.
Sorry Adviser in this case but it’s likely not done yet :-/
I bet you wished you had added another 20 pages to your 100 page SoA to protect you against this sort of stuff.
Nothing will protect an Adviser from vexatious litigants demanding AFCA to always find a way to pay consumers.
Currently dealing with a vexatious claim within the practice relating to a long since ex-client. Obviously driven by client’s new adviser with vested interest but no access to the file. No substance, but has so far cost the practice $20K worth of time responding at licensee level. It will probably go to AFCA on the “but it’s not fair” basis & get rejected after another $20K of time sunk into it, but no award of costs against the claimant possible? Yet another millstone around the neck of the industry. This needs to change.
Don’t be too confident it will get rejected is my advice. AFCA is not set up to protect advisers.
Had a client win an AFCA determination based on cash return on initially invested funds and that the investment ownership be transferred to our business within 14 days. The above AFCA instructions were emailed to our lawyer (no cc to ourselves) sent Xmas eve to our lawyer, who was on Xmas break. When everyone returned to work the 14 days had elapsed. A complaint directed to AFCA from ourselves re the unfairness of the procedure was returned with a “bad luck” reply. A subsequent email asking as to who this issue might be escalated to was met with a no response. Someone has to make them accountable as they do not follow legal procedure