Financial investment complaints rose 33% in 2009, Ombudsman says

The number of complaints regarding managed investments doubled in the 12 months to June with disputes about margin loans increasing over 400%, the Financial Ombudsman Service said yesterday.

Chief Ombudsman Colin Neave said in a statement there has been a 68% increase in the number of investment disputes, a 36% increase in credit disputes, a 34% increase in general/domestic insurance and a 28% increase in life insurance disputes.

The service also recorded a massive 853 new complaints regarding managed investments – a 96% increase from the previous year, while disputes regarding superannuation rose 67% to 284.

The majority of the complaints related to financial advice or perceived poor service, with 57% of complaints about investment relating to financial planners. About 33% refer to managed investment providers.

Margin-lending complaints rose 420% to 181, while overall complaints rose by about 33% to a total of 19,107.

One of the reasons for the increase in complaints was the collapse of several businesses in the finance sector, including Storm Financial, Basis Capital Investments, Great Southern and Timbercorp.

Neave said the rise in the number of complaints is due to the financial sector being the hardest hit by the economic downturn, with many customers anxious about their savings.

“Many consumers are experiencing anxiety about their investments or have found themselves in financial difficulty or hardship, as shown by the increases in certain areas,” Neave said.

“For instance, we are seeing large increases in disputes in areas such as the provision and/or financial advice relating to margin loans and in consumer credit issues such as break costs to fixed rate or business loans. In addition, extreme weather events such as storms or bushfires have had an impact on general/domestic insurance disputes.”