The Financial Ombudsman Service (FOS) dealt with fewer disputes about investments last financial year, but it says poor communication about risk is an issue for advisers and clients.

FOS accepted 1626 investment disputes, down 14% on the previous year.

Chief Ombudsman Shane Tregillis told insuranceNEWS.com.au such complaints may be returning to pre-global financial crisis levels.

Disputes about managed investments accounted for 931 of the total, with 41% of these concerning advice.

Mr Tregillis says poor communication features in many FOS disputes, with consumers complaining about investment services when they feel risk has not been adequately explained.

The FOS annual report says poor communication of risk can leave advisers responsible for investor losses.

Issues include risks necessary to achieve an investor’s goals, the risk of not achieving goals, the level of risk an investor is prepared to take and the risk inherent in particular financial products or strategies.

Mr Tregillis says simple and clear language helps investors understand all these aspects.

Although investment disputes are down, he notes a worrying rise in the number of members becoming insolvent.

“Numbers have more than doubled in the comparable periods, jumping from seven members in 2010/11 to 18 in 2011/12.

“The upward trend we’ve seen in the number of members going into administration or liquidation has meant we have either turned applicants away or, where we have issued a favourable decision, applicants have remained uncompensated.”