Two dead quarters for advice but AFCA sees issues

The Australian Financial Complaints Authority (AFCA) has not found reason to confirm any systemic issues in the investments and Advice product area covering financial advice for the last two quarters.

Nonetheless AFCA has used its latest systemic review covering the third and fourth quarters of 2024/25 to describe investments and advice as remaining “a priority for systemic risk assessment, reflecting both complaint trends and broader regulatory scrutiny”.

It then noted four areas which had been highlighted during the period as highlighting recurring areas of concern:

• Advice quality and suitability – ensuring advice frameworks properly assess client circumstances and avoid mis-selling or inappropriate product distribution.
• Disclosure and transparency – addressing the risks of complex or opaque fee structures, and making certain that clients clearly understand ongoing service arrangements.
• Distribution practices – monitoring concerns around outbound sales models, superannuation switching, and the boundaries between general and personal advice.
• Unregulated channels – considering the growing role of digital platforms and informal advice networks, which can expose consumers to poor outcomes when not subject to strong oversight.

“Although no systemic determinations were made this quarter, these themes remain central to preventing consumer detriment and sustaining trust in the advice sector,” the AFCA document said.

“They also align with ongoing regulatory priorities around quality of advice, product governance, and distribution practices,” it said.

The document then noted that: “Systemic risk in the advice sector often lies not in single transactions but in the frameworks that govern advice quality, disclosure, and distribution.

“Even without confirmed systemic findings, complaint activity suggests these areas will continue to be a focus for AFCA’s systemic monitoring,” AFCA said.