ASIC Tightens Timeframe for Complaints Handling in Financial Sector

Source: Regulation Asia Editors, Regulation Asia 2020-07-31

ASIC (Australian Securities and Investments Commission) has released an updated regulatory guide (RG 271) setting out requirements for how financial firms deal with consumer and small business complaints.

The updated standards follow extensive consultation with consumer and industry representatives, and a wide body of work establishing an evidence base for raising IDR (internal dispute resolution) standards across the financial sector – including on-site visits at the big four banks and AMP during 2019 as part of ASIC’s enhanced supervision programme.

Further, ASIC found in a 2018 consumer study that more than half of consumers who considered making a complaint about their financial services provider did not proceed. Almost half of these did not proceed “because they did not think it would make a difference”.

“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,” said ASIC deputy chair Karen Chester. “A financial firm’s approach to complaints handling is a meaningful measure of how it treats its customers and listens to their voice.”

Under the new regulatory guide, superannuation trustees have just 45 days to respond to a complaint, compared to 90 days previously. For other financial services and credit complaints, the timeframe has been cut from 45 days to 30 days.

The updated standards also set out what information firms must include in written IDR responses to allow consumers to decide whether to escalate their complaint. They also set new timeframe requirements for customer advocate reviews of appeals against IDR decisions.

ASIC has given the financial industry has until 5 October 2021 to comply with the new IDR standards and requirements. It will also publish a legislative instrument clarifying the enforceable 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,” Chester said.

ASIC also plans to conduct further consultation on the IDR data reporting regime, recommended by the Ramsay Review into dispute resolution and complaints framework and passed into legislation in 2018.

Separately, ASIC will follow-up with each of the firms that were subject to supervisory on-site visits about the changes they are making to improve IDR outcomes.

ASIC

regulatory guide

ASIC Tightens Timeframe for Complaints Handling in Financial Sector

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