ASIC moves on complaint handling with new data standards

  • By AB+F Editorial

ASIC has initiated public consultation on new standards about how financial firms handle consumer and small business complaints.

The proposed standards, which include new mandatory data reporting, will 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 address a problem before a consumer or small business can escalate their complaint to the Australian Financial Complaints Authority (AFCA).

All financial firms 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,” ASIC Deputy Chair Karen Chester said.

“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,” 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.

Meeting the needs of the digital age

Previous consumer research by ASIC found 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.

The consultation covers:

- proposed updates to ASIC’s IDR standards (currently set out in Regulatory Guide 165 Licensing: Internal and external dispute resolution); and

- the proposed framework for mandatory IDR data reporting by financial firms to ASIC.

Importantly, the proposed new standards and data reporting requirements will continue to forge the effective relationship between IDR and the work of AFCA, the independent external complaints scheme.

Some key elements of the new standards that ASIC is seeking feedback on include:

- reducing maximum time frames 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 end 2019.

A further, separate consultation on the publication of IDR data will commence in early 2020.

AFCA chief ombudsman and CEO David Locke supported the proposed changes.

"Increased transparency is good news” he said.

“It will help firms to continuously improve, and that will be good for the firms and their customers alike.

“We also welcome the idea of requiring firms to provide a standard set of data – this will help companies know how they compare to their competitors and help to inform consumers about the companies they’re dealing with.

“In this digital age, the move by ASIC to require firms to include complaints made on social media platforms, is entirely appropriate” he said.