Complaints involving brokers

Many complaints about brokers relate to issues concerning the quality of advice or the level of service provided. Unless these indicate a breach of ASX Rules, it is not the role of ASX to handle them. In many of these cases compensation may be sought by the person complaining, but ASX does not have power to grant or make awards of compensation or damages. 

There are also a range of products and services which may be provided by stockbrokers, but which ASX cannot address, as they are not covered by the ASX Rules.  These include unlisted Contracts for Difference (CFDs), transactions in shares on other exchanges (including overseas markets), foreign exchange transactions or investments in unlisted funds.

For these matters you should first:

  • Register your complaint with your stockbroker and,
  • If you are not satisfied with the outcome, register your complaint with an approved complaints resolution scheme.

If you suffer financial loss that is caused by a stockbroker (or past stockbroker) in the ASX Market, you may have a claim on the National Guarantee Fund.

If you consider that your complaint may involve some other breach of the law, you should approach ASIC.

Stockbroker complaints

ASX can only deal with complaints about stockbrokers where they indicate a possible breach of the ASX Market Rules, the ACH Clearing Rules or the ASTC Settlement Rules.

If you consider that your complaint may involve a breach of the ASX Market Rules, the ACH Clearing Rules or the ASTC Settlement Rules, you should register your complaint with ASX Customer Service.

In particular, if you wish to raise an issue relating to the integrity of the market (eg. you consider that there has been insider trading or that a stock price has been manipulated), then please do contact ASX.  (See contact details below).

How we deal with your complaints 

How to register your complaint with your broker

In the event that you decide to pursue an inquiry or complaint with your broker, we suggest you take the following steps:

  • First, thoroughly read the documentation and contracts (client agreements, sponsorship agreements, cash management agreements, terms and conditions, etc) provided by your broker. You may find the answer to your query or complaint in those documents. If you don’t have a copy of the documentation, ask your broker for a copy.
  • If the matter is not addressed in the documentation, contact the adviser or person you normally deal with and discuss your problem. You may want to ask your adviser to ensure that they register your complaint with their Complaints Manager. If, when discussing your issue with your broker, they cannot resolve the issue immediately, ask how long they will need to reply. You should then ensure they contact you within the time they have set.
  • If your adviser does not resolve the issue to your satisfaction, contact the main switchboard of the broker and ask for their Complaints Manager.  Again, if the issue cannot be resolved immediately, ask how long they will need to reply and you should ensure that they contact you within the time they have set.  You may need to follow up your complaint by putting it in writing. You should do this immediately and address it to the Complaints Manager.
  • Finally, if you are not satisfied with the response, you could ask the organisation which approved complaints resolution scheme it belongs to and contact that scheme.

Approved complaints resolution schemes

The second course of action you can take if you are not satisfied with the resolution offered by your broker, or if it remains unresolved, is to register your complaint with an approved complaints resolution scheme.

Brokers who provide advice to retail clients are required to belong to an approved complaints resolution scheme under the conditions of the licence granted to them by ASIC.

At present, there is only one complaints scheme approved by ASIC for the stockbroking industry. This is the Financial Ombudsman Service (FOS) (formerly the Financial Industry Complaints Services - FICS).

FICS/FOS can determine financial compensation for valid complaints within the terms set out in the FICS Rules/the FOS Investments Life Insurance and Superannuation Terms of Reference. The extent of any financial compensation is determined by the extent of your loss. FICS/FOS does not award consequential damages or punitive costs.  Also FICS/FOS cannot deal with complaints where the extent of financial loss experienced by you exceeds $100,000 (complaints received before 1 July 2008, or where you had enough information before 1 July 2008 to be aware of the facts relevant to your complaint) or $150,000 (more recent complaints).  If the amount of your loss exceeds the relevant maximum the complainant must obtain consent from the Participant for FICS/FOS to hear the complaint.

Members of FICS/FOS are bound by the FICS Rules/the FOS Investments Life Insurance and Superannuation Terms of Reference to fully assist the scheme to resolve your inquiry or complaint and are bound by the decisions made by FICS/FOS.

FOS can be contacted at:

Financial Ombudsman Service
GPO Box 3
Melbourne  Vic  3001

Phone:  1300 78 08 08
Fax: (03) 9613 6399
Email: info@fos.org.au
Internet: www.fos.org.au

National Guarantee Fund

The third course of action you can take if you are not satisfied with the resolution offered by your stockbroker, or if it remains unresolved, is to investigate whether your loss may be covered by the National Guarantee Fund (NGF).

The NGF is the compensation scheme for the Australian Securities Exchange. It is administered by a trustee: Securities Exchanges Guarantee Corporation Limited (SEGC). The NGF's function is to provide investor protection by compensating investors in the circumstances set out in Division 4 of Part 7.5 of the Corporations Act (Cth) and Corporations Regulations arising from dealings with participants of ASX and, in limited circumstances, participants of Australian Clearing House Pty Ltd (ACH).

The NGF is only able to consider claims in the limited range of circumstances specified in the Corporations Regulations. These circumstances are explained in the NGF Information Booklet, which is available from the SEGC and is downloadable from the SEGC website www.segc.com.au.

The legislation governing the operation of the NGF is quite technical and must be read in the light of the definitions, which affect the meaning of all provisions.

Payments from the NGF can only be made in accordance with the above legislation.

The SEGC, as trustee of the NGF, can be contacted at:

PO Box H224 Australia Square
Sydney NSW 1215
Phone: (61 2) 9227 0424
Fax: (61 2) 9227 0436
Email: segc@asx.com.au       

ASX

An important difference between approved complaints resolution schemes and ASX is that, whereas schemes can grant financial compensation and deal with service related complaints, ASX cannot do this. Nor can ASX award damages or compensation.

The scope of ASX action is to investigate a complaint where possible breaches of the Rules of the Exchange are evident, and if during the course of investigation into the complaint, breaches of the Rules of the Exchange are detected, ASX may commence disciplinary action against the stockbroker.  However, even if a breach of the rules is proven, compensation to the complainant cannot be made.

ASX cannot take action in relation to financial losses resulting from mistakes, bad judgment or risk taking by you, nor due to a service related matter. 

If you believe your complaint involved a potential breach of the Rules of the Exchange, and you wish to formally lodge your complaint with ASX, you should:

  • Complete the ASX complaint form.  If you are unable to download the ASX complaint form, you contact ASX Customer Service on 131 279 or (02) 9338 0000 to obtain a copy;
  • Attach a written copy of your complaint; and
  • Attach all supporting documentation.

Once you have completed the form, return the form, written copy of the complaint and all supporting documentation to: 

Customer Service
ASX Limited
PO Box H224
Australia Square NSW 1215
Fax: (61 2) 9227 0885
Email: info@asx.com.au

The fact that you have made a complaint will not be disclosed to any external parties without your authorisation, unless ASX is required by law to do so.

ASIC

You may also lodge your complaint with ASIC. ASIC can deal with matters involving potential breaches of the Corporations Act by your stockbroker.

The contact details for ASIC are:

ASIC Complaints
Australian Securities and Investments Commission
PO Box 9149
Traralgon  VIC  3844
Phone: 1300 300 630 or (61 3) 5177 3988
Fax: (61 3) 5177 3749
Web: http://www.asic.gov.au

More information on the matters ASIC can and cannot deal with are located at the ASIC website.

How we deal with your complaint

We can only act upon a breach of the ASX Group Operating Rules. So if during the investigations, a breach of our Rules is apparent, we may commence disciplinary action against the Participant. We may also refer the matter to ASIC.  However, if no breach of our Rules is apparent (for example, if the matter is a service-related issue), we may not be able to take any action in relation to the matter.

In any event, ASX does not have the power to order payment of damages or compensation.

If our enquiries indicate a potential breach of our rules, we are obliged to embark upon detailed investigations and then we may have to prove, before a Disciplinary Tribunal (and having regard to processes of natural justice), that those breaches have occurred.  Those investigations could take several months to conclude.

There are restrictions contained in our Rules in relation to the extent to which we can make information we obtain available to you. There are also restrictions on the extent to which we can inform you of the findings of our enquiries unless those findings are made public.

Publications outlining disciplinary determinations against Participants are accessible free of charge through the supervisory section of our website.

In certain circumstances, if ASX considers that an entity may be in breach of the ASX Rules, ASX is required under a memorandum of understanding (“MOU”) with ASIC to refer the matter to ASIC.  ASIC will then determine whether to use the legal powers available to it to investigate the matter further.

Under the terms of the MOU with ASIC, the fact of a particular referral having been made to ASIC is kept confidential in order to ensure that the success of any ongoing investigation is not jeopardised.  However, ASX publishes the number of referrals made to ASIC on an annual basis.

So for this reason also, we may not be able to inform you specifically about the action we will take in relation to your complaint or whether there has been a breach of our Rules or a breach of the law.

Nevertheless, ASX can assure you that your concerns will be investigated.