ASIC consults on new complaints-handling rules

All ASIC-regulated financial firms are required by legislation to have an IDR system that meets the corporate regulator’s standards. However, the corporate watchdog’s deputy chair, Karen Chester, noted that “there is room for much improvement when it comes to handling consumer complaints” in the financial services industry.

“The Ramsay Panel Review, recent ASIC research, case studies before the financial services royal commission and our own supervisory work have all identified shortcomings in consumer complaints handling,” Ms Chester said.

“Consumers expect and need a fair, timely and effective way to have their complaints dealt with, and to be provided redress where appropriate. The absence of such effective redress, and the failure of firms to identify and look into systemic complaints, were key findings of the [financial services royal commission] and the prudential inquiry into the [Commonwealth Bank of Australia].”

The regulator has, therefore, released new proposed standards for public consultation in a bid to make the complaints-handling performance of financial firms transparent.

ASIC’s proposed updates to Regulatory Guide 165 include:

• updating the definition of “complaint” to that stipulated in AS/NZS 10002:2014: “[An expression] of dissatisfaction made to or about an organization, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.”
• amending the definition of “small business” in the Corporations Act to align with the definition in the AFCA rules
• requiring financial firms to record a unique identifier or case reference number and prescribed data set for all complaints received, including those that are resolved to a complainant’s satisfaction at the first point of contact
• requiring financial firms to report IDR data to ASIC at half-yearly intervals
• publishing IDR data at both aggregate and firm levels
• reducing maximum time frames for providing IDR responses from 90 days to 45 days for superannuation complaints, and from 45 days to 30 days for all other complaints (excluding those pertaining to hardship notices, default notices and requests to postpone enforcement proceedings), with IDR delay notifications applicable only in exceptional circumstances
• introducing new requirements on financial firms regarding systemic issue identification, escalation and analysis, such as boards to set clear accountabilities for complaints-handling functions, staff that deal with disputes to consider whether complaints involve potentially systemic issues, staff to escalate possible system issues for action, and staff to follow up on escalations and report them in a timely manner, among other requirements
• requiring customer advocates to also comply with RG 165.

ASIC said the proposed new standards and data reporting requirements would “continue to forge the effective relationship between IDR and the work of [the Australian Financial Complaints Authority]”.

“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,” Ms Chester said.

“For a regulator, it also provides an invaluable insight into how non-financial risks are being managed by the firm and, ultimately, the board. ASIC expects greater investment and attention by boards to their own internal customer complaints data and complaints-handling performance.”

Feedback to ASIC’s proposed IDR rules is to be provided by 9 August 2019, with the corporate regulator aiming to publish the new standards in its updated RG 165 by the end of 2019.

Additionally, the regulator said a separate consultation on the publication of IDR data will be launched in early 2020.

[Related: AFCA to herald ‘a new era of good faith’ after RC]