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ASIC consults on lifting standards and transparency of complaints handling

ASIC consults on lifting standards and transparency of complaints handling

ASIC has initiated public consultation on new standards about how financial firms handle consumer and small business complaints, in an effort to rectify shortcomings. 

  • Maja Garaca Djurdjevic
  • May 16, 2019
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ASIC's proposed standards include new mandatory data reporting, which is expected to improve the way that consumer complaints are dealt with across the financial system and make firms’ complaints handling performance transparent.

Financial firms will be required by ASIC to meet the new standards when they deal with consumer complaints through their Internal Dispute Resolution (IDR) arrangements. 

IDR is the first step in the complaints handling process – an opportunity for the financial firm to investigate, resolve or redress a problem before a consumer or small business can escalate their complaint to the Australian Financial Complaints Authority (AFCA). 

All financial firms (including banks, insurers, credit providers, advisors and most superannuation funds) are required by legislation to have an IDR system that meets ASIC’s standards.

"It is widely acknowledged there is room for much improvement when it comes to handling consumer complaints in our financial system. The Ramsay Panel Review, recent ASIC research, case studies before the Financial Services Royal Commission (FSRC) and our own supervisory work have all identified shortcomings in consumer complaints handling," said ASIC deputy chair Karen Chester.

"With the benefit of broad consultation, ASIC’s new standards will lift complaints handling performance of firms and ultimately consumer outcomes and fairness of the financial system. And transparently so. These standards will also apply in their entirety to all APRA regulated superannuation funds," Ms Chester said.

The proposed new standards have been informed by recent consumer research by ASIC and findings from aspects of ASIC’s new onsite supervisory program – Close and Continuous Monitoring – which is currently reviewing IDR policies, practices and procedures in Australia’s five largest and most complex financial services institutions. 

ASIC’s consumer research published late last year revealed that while 17 per cent of Australians surveyed considered making a complaint to a financial firm in the preceding 12 months, only 8 per cent went on to lodge a complaint, while 18 per cent of surveyed complainants dropped out or withdrew their complaint before it was concluded.

"Firm performance in how they handle customer complaints, and their interaction with AFCA, will increasingly be in plain sight. This greater transparency will inform consumer and broader public understanding of how well firms treat their customers," said Ms Chester.

Some key elements of the new standards that ASIC is seeking feedback on include reducing maximum timeframes for IDR responses; what constitutes a complaint, including if received by way of a firm’s social media; setting clear standards about what should be in written reasons for decisions; strengthening the requirement that firms take a systemic focus to complaints handling; and the details of the new framework for recurrent complaints data reporting to ASIC. 

ASIC seeks public input on the consultation documents by 9 August 2019 and aims to release new IDR standards (in a new Regulatory Guide 165) by the end of the year.


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