ASIC has today released updated requirements for how financial firms deal with consumer and small business complaints – under their Internal Dispute Resolution (IDR) procedures.
‘Complaints handling is the first step in the dispute resolution framework and plays a critical role for firms to restore consumer trust when things have gone wrong. A financial firm’s approach to complaints handling is a meaningful measure of how it treats its customers and listens to their voice,’ said ASIC Deputy Chair Karen Chester.
Regulatory Guide 271 Internal dispute resolution (RG 271) has been released after extensive consultation with consumer and industry representatives. This follows a wide body of work establishing an evidence base for raising IDR standards across the financial sector, including:
- ASIC Report 603 The consumer journey through the InternalDispute Resolution process of financial service providers
- IDR on-site visits at NAB, ANZ, CBA, Westpac and AMP during 2019 as part of ASIC’s enhanced supervision program.
‘Most financial firms, like us, want to see positive complaint management cultures that welcome complaints and focus on fairness, quality and timeliness in how they are handled. Better IDR not only benefits consumers and
small business, it arms the boards of financial firms with rich and real time data on the customer experience and whether their needs are being met or not’, Ms Chester said.
ASIC’s updated standards and requirements will drive fair and timely complaint outcomes for consumers and sharpen industry’s focus on systemic issues. RG 271:
- introduces reduced timeframes for responding to complaints, including superannuation complaints
- sets out what information firms must include in written IDR responses to allow consumers to decide whether to escalate their complaint
- sets new timeframe requirements for customer advocate reviews of appeals against IDR decisions
- gives guidance about how firms can deal with representatives who are not acting in consumers’ best interests.
ASIC will publish a legislative instrument alongside RG 271 which clarifies the enforceable IDR standards and requirements.
‘At this time of economic uncertainty, consumer access to fair and timely complaints handling is more important than ever.
‘Making it right when consumers have suffered loss is an important way to stimulate ongoing consumer participation and trust in the financial system. New requirements recognising the harm that can be done by some debt management firms will also assist in addressing long-standing concerns about their behaviour which are shared by industry and consumer representatives’, Ms Chester said.
ASIC has given industry until 5 October 2021, to comply with the new IDR standards and requirements.
‘While this extended timeframe reflects the impacts of COVID 19, publishing RG 271 now gives affected firms certainty and enough time to make systems and other changes necessary to meet the updated regulatory guidance’, Ms Chester said.
In the coming months, ASIC will conduct further consultation on the IDR data reporting regime, which was recommended by the Ramsay Review into dispute resolution and complaints framework and passed into legislation in 2018.
Separately, ASIC is following up with each of the firms that were subject to supervisory on-site visits about the changes they are making to improve IDR outcomes.