The Insurance and Financial Services Ombudsman (IFSO) has upheld a woman’s claim after her financial adviser tried to enforce a fee that she had not agreed to.

The woman sought help from a financial adviser to source a home loan. When the woman refinanced her loan, the financial adviser charged her a “cancellation clawback” which had been under the Service Fees in her contract.

The woman complained to the adviser, saying she had never ticked the box in the contract to agree to the cancellation fee. The agreement stated the fee was to recover costs for “time spent by the Adviser and administration staff, and any medical examinations that are required.”

The woman made a claim to the IFSO, who can resolve issues regarding insurance and financial services. The IFSO upheld the woman’s claim, finding that the adviser could not recover the fee as she had not consented to paying it.

The IFSO decided that even if the fee had been agreed to, it could not have been enforced by the adviser because it was too vague.

If the adviser wished to charge the woman for the “time” spent on services, it had to be much more specific about the time and work done. The adviser also should have clearly informed the woman of any charges or fees payable.

In this case, the woman neither agreed to the fee nor had she been informed about what the fee was for. The IFSO decided that if the fee was enforced, the adviser would be in breach of the Financial Markets Conduct Amendments Regulations.

Financial advisers must inform their clients about any fees payable. If you are confused about your obligations, it pays to seek advice from a professional with experience in the area.


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