Financial advisers account for more than one-third of all serious misconduct issues identified by the Financial Ombudsman Service since early 2012.
In a submission to the Royal Commission, FOS attributed 39% of serious misconduct identified in the last six years to financial advisers. These investigations involved instances of fraudulent or grossly negligent conduct and willful breaches of the law.
Despite this, the proportion of investments and financial advice disputes accepted by FOS over the last decade only account for 5% of the total. The most common issues cited being the provision of inappropriate financial advice and failure to follow customer instructions.
Such disputes generally involved financial advice, managed funds, stockbroking and trading derivatives, options and cryptocurrency.
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FOS stated: "Inappropriate financial advice can result in consumers investing in unsuitable products and suffering losses for which they were unprepared or financially unable to support. This can impact their financial wellbeing and plans for retirement."
Further, 55% of all unpaid determinations involve financial advisers, adding to a $14 million bill of compensation yet to be paid as at 31 December 2017.
"Since 1 January 2010, outstanding failures to pay FOS determinations have resulted in excess of $14 million dollars not returned to affected consumers. These have had and continue to have significant impacts on people's lives," the submission reads.
FOS will be consolidated into one governing complaints body, along with the Credit and Insurance Ombudsman and Superannuation Complaints Tribunal, to be known as the Australian Financial Complaints Authority.
Last week, the Government named former Federal politician Helen Coonan as the inaugural chair of AFCA, which will begin receiving complaints from 1 November 2018.
Today, ASIC released draft updated guidance as to its oversight of AFCA for consultation.
"ASIC is issuing draft updated RG 139 now as we believe that clarity about ASIC's policy approach at this stage of the transition will assist all stakeholders. It will also enable ASIC to take into account and respond to any emerging issues that arise during the transition period," ASIC deputy chair, Peter Kell said.
The consultation period will last five weeks, closing on 6 April 2018. The guidance will be finalised in line with AFCA coming into effect in November.