The Financial Industry Complaints Service (FICS) is failing to listen to its members, the FPA has alleged in the latest stoush over plans to raise compensation amounts for investors.
The FPA is about to issue a strongly-worded letter to FICS that repeats previous complaints about the way the complaints scheme operates.
The association’s chief executive Jo-Anne Bloch said FICS’s latest consultation paper recommending an increase in monetary limits failed to address the FPA’s call to address structural change before it decided to increase limits.
“They have not in any way, shape or form changed their processes,” Bloch told InvestorDaily.
“You put in a consultation paper and FICS just comes back with whatever it wants.”
Bloch said FICS is also failing to address the concerns of professional indemnity insurers, who she says are likely to stop insuring planners if there is a substantial increase.
“We’ve ended up with the ridiculous situation where planners are being asked to wear the cost,” she said.
“We’re pretty upset about this.”
But FICS chief executive Alison Maynard rejected the criticism, saying while there was room to improve the FPA was listening to a few vocal planners.
“It’s a small few making this noise and it’s not justified,” she said.
“Some smaller financial planners cannot cope with a panel telling them their advice was inappropriate so they go and speak to their friends and make a lot of noise. It’s a pity the FPA has to listen to that noise.”
Maynard said FICS is undertaking a number of structural reviews that will address the FPA’s concerns and is also about to be independently audited.
She said 86 per cent of FICS’ members who had gone through the disputes process say the process was fair or excellent.
The compensation cap through the external disputes resolution scheme is currently $100,000 for non-life insurance claims.
FICS wants to raise this to $180,000 from 2008 and then to $280,000 from 2010 in line with pressure from ASIC.
The FPA has rejected any increase in the monetary limit as well as any hike in FICS membership fees to cover the increase, saying smaller licensees will suffer.
But Maynard said the scheme has to find a compromise between all parties.
“The FPA is not the only stakeholder,” she said.
