How Financial Planners Should Word a Client Complaint Response Letter (AFCA-Ready)

24 September 2026·4 min read

Quick answer: A financial planning complaint response letter should acknowledge the client's concern genuinely, explain the reasoning behind the advice or service in plain English, and set out a clear resolution or next step — in that order. Complaints that escalate to AFCA often do so because the client felt unheard in the initial response, not purely because of the underlying issue, so getting the tone right early genuinely matters. 🤍

Every financial planning practice will eventually receive a complaint — about performance, a fee, a communication gap, or advice the client feels didn't suit them. 💖 How that first response is worded matters enormously: a defensive, compliance-heavy letter tends to escalate matters, while a genuinely well-handled response often resolves things at the informal stage, well before AFCA is ever involved.

What most financial planners get wrong

The most common mistake is opening with the Statement of Advice or engagement terms rather than genuine acknowledgement — it reads as procedural even when the substance is completely reasonable. The second mistake is over-explaining technical or compliance detail the client can't easily follow, when what they usually want first is a clear, human answer to "what happened, and what happens now."

The complaint response structure:

Acknowledge specifically: "Thank you for raising this — I understand why this would be concerning, and I want to make sure it's properly addressed."
Explain plainly: The reasoning behind the advice or service, in language the client would recognise, not compliance terminology.
State the resolution clearly: What's being done, or why the original advice or position stands, explained so it can actually be followed.
Note the next step if unresolved: Reference your internal dispute resolution process and, if relevant, AFCA — factually, not defensively.

A client unhappy about investment performance during a downturn: Explaining the reasoning behind the original risk profile and strategy in plain terms — rather than just restating market conditions — helps the client see the advice was considered, even if the outcome feels disappointing right now.

A client disputing an ongoing advice fee relative to the service received: A clear, specific account of what was actually delivered across the period in question (reviews held, advice given, documentation provided) turns a vague fee complaint into a concrete, checkable answer.

A client who feels they weren't told about a risk clearly enough at the outset: Acknowledging the specific concern honestly — "I want to make sure that risk was clear at the time" — before referring back to the relevant advice documentation, respects the client's experience rather than only pointing to paperwork.

How to actually draft one

Write the acknowledgement first, separately, and check it addresses the client's specific concern rather than reading as generic. Translate any compliance or product language into terms the client would use themselves. Have your compliance function or a second senior adviser review both the substance and the tone before it's sent — the two are equally important for a complaint response in this profession.

💡 Acknowledge before you reference process: A client who feels heard first is far more likely to accept a reasonable explanation. Lead with process, and even a fully compliant, correct answer can still feel dismissive.

Mistakes to avoid

Opening with the Statement of Advice or engagement terms instead of genuine acknowledgement.
Over-explaining technical or compliance detail before addressing the client's actual concern.
Skipping a tone review, focused only on technical accuracy.
Failing to clearly reference internal dispute resolution and AFCA options when a complaint remains unresolved.
Treating every complaint identically regardless of how serious or personal the underlying issue is.

Please note: general information only, not personal financial advice — check your current internal dispute resolution and AFCA-related obligations with your licensee and ASIC's regulatory guidance.

Frequently asked questions

Are we required to mention AFCA in every complaint response?

Generally, licensees have specific requirements about referencing internal dispute resolution and AFCA once a complaint reaches a certain stage or timeframe — this is worth confirming against your licensee's current process rather than assuming informal handling is always sufficient.

What if the complaint is about investment performance we couldn't control?

The acknowledgement-first structure still applies — acknowledging disappointment about an outcome isn't the same as accepting the advice was wrong. Explaining the reasoning behind the original strategy, calmly and clearly, is usually more persuasive than defending the market conditions alone.

Should the adviser or compliance write the response?

Often a collaboration works best — the adviser bringing the client relationship and context, compliance reviewing the substance and ensuring regulatory requirements are met. Either way, the tone principles above should hold regardless of who drafts it.

Can a well-handled complaint letter reduce the chance of an AFCA escalation?

Often, yes — many AFCA complaints escalate because the client felt dismissed in the initial response, not purely because of the underlying issue. It's not a guarantee, but genuinely thoughtful handling at this stage measurably reduces that risk.

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Written by

Kate, founder of Chronically Online

I help Gold Coast and Brisbane businesses grow with branding, websites and marketing that actually works.

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