The Australian Financial Complaints Authority (AFCA) has seen a rise in complaints related to managed accounts. 

Speaking at the My Dealer Services conference in Sydney last week, AFCA senior ombudsman Nick Batard said managed accounts-related complaints are up 25 per cent, and while the actual number of arguably low, they do highlight growing concern in how some advisers are using them. 

“We’ve had a 25 per cent increase, but it’s a very low number, it’s 10 over the first half of the year, so we actually don’t see it currently being as a massive problem of those complaints and.  

“Almost all of them were focused on one of two things; either investing outside the investment program or conflicts of interest.” 

In August, ASIC released its FY2025-26 Corporate Plan outlining its intention, to conduct surveillance on AFSLs recommending and offering managed accounts to retail clients. 

“We will consider compliance with the general licensee obligations and advice conduct obligations. Our surveillance will focus on governance frameworks, management of conflicts of interest, and outcomes for consumers,” the report said. 

This comes as more advisers are turning to managed accounts as an efficient, professional-grade investment solutions, something is particularly attractive for advisers who are notoriously time-poor. 

Kirkland explained that the regulator had not enacted a close assessment of the managed account space for a number of years, but now believed a review was “warranted and timely” given the growth in the space and potential risks it was observing. 

“We’ll examine how financial advisers, when they recommend managed accounts, comply with their obligations to act in the best interests of their clients. And we will be examining what conflicts of interest may be present, and how these conflicts are addressed by advisers and licensees,” Kirkland said. 

“We’ll be looking at what conflicts may arise, what challenges they may present, and how they’re being managed.” 

Joining Batard on the MDS panel, FAAA general manager of …, advocacy and standards said they expect the report will be handed down later this year or early next year. 

“There is no doubt that their particular interest is conflicts of interest, and whether they are being used in the genuine interest of clients. 

“[Managed accounts] have a real role to play. They do make it much more efficient. You don’t have to provide further advice when you’re changing a portfolio, but I think they’re going to look closely at how interest conflicts are managed and making sure that fees that are being generated are reasonable.  

“So, keep an eye on what ASIC has to say about that over the remainder of this year.” 

This issue is one in particular that the FAAA has been consistently tracking with the association’s chief executive, Sarah Abood, telling the IMAP Portfolio Management Conference in March that she was concerned about whether the inquiry is a ‘risk weighted’ review. 

A risk-weighted review is where ASIC explores areas where it already knows problems exists rather than one which covers the whole sector.   

“ASIC has, on occasion, done reviews into rectors are what they call risk weighted and that means that they’ve gone out and looked for places where they know there are problems,” Abood said.   

“That becomes a problem if the report is presented as a report into the sector or on the current state of the sector. The most recent one was Australian super funds. So, it was a risk weighted exercise, it was in the report, but a lot of media didn’t pick up on it and it was reported as a report into the super sector.”   

While it’s still unclear, she suggested that taking a risk weighted approach may cause undue damage if ASIC doesn’t make it explicitly clear as it could see the profession tarred with the same brush. 

Abood added: “We don’t know whether this is that, but it will be important for us to know when the report comes out, whether this was targeted to areas where ASIC believes are high risk or whether it’s an impartial inquiry across the whole sector. We don’t know yet.” 

According to Abood, ASIC has suggested that an update can be expected by the of the 2026 calendar year, “but there’s no commitments to any dates or specific targets at this stage”.