Investment Advice and Complaints about Advice in Australia

Another interesting report out of Australia this week is the annual report of the Financial Ombudsman Service (FOS).   http://fos.org.au/centric/home_page/publications/annual_review.jsp  

Instead of having a dispute resolution system for securities customers (like our FINRA arbitration and mediation system), another for 401(k) investments (in the U.S. an internal plan complaint system followed by lawsuits in the federal courts), another for insurance (in the U.S. complaints to state regulators), etc., FOS covers all of those areas.

Disputes involving superannuation (the Australian term for pensions) increased in the past year.  The largest category of disputes (32% of the total) was disputes involving "self-managed superannuation funds" (SMSFs) (the closest equivalent in Australia to U.S.IRAs).  That shouldn't be surprising, in part because in terms of both assets and numbers of funds, SMSFs constitute the largest category of funds.  In terms of the issue in dispute, advice constituted the largest category (at 26%) followed closely by service complaints (at 22%). 

So, as in the U.S., advice on pension-related savings can be problematic in Australia.  Unlike the U.S., Australia has a project in place to review and make revisions to the its regulation of financial advice.  Check in here for more on that soon.