A day before the ASIC Forum 2019, the Australian Securities and Investment Commission (ASIC) opened consultation regarding transparency around complaints handling.
The regulator indicated that proposed standards will include new mandatory data reporting, which will improve complaints handling across the financial industry, as well as make the process more transparent.
The regulator is hoping to close the consultation period on 9 August of this year and intends to have the new IDR standards ready before the end of the year.
This intent to improve standards comes after ASIC found evidence of ‘consumer fatigue’ when it comes to the process of lodging a complaint.
At the commencement of the consultation period, ASIC Deputy Chair Karen Chester said, “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.”
Issues identified in the complaints process include:
The length of time it takes for the complaints to be processed;
One in seven found it difficult to find the financial firm’s details of where to lodge a complaint; and
27 per cent of those who complained did not have the process explained to them properly.
While an external dispute resolution body has been developed—the Australian Financial Complaints Authority (AFCA)— ASIC pointed out that IDR is the first step in the complaints 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).”
Earlier this year, AFCA’s own remit was expanded back to January of 2008.
In response, ASIC’s announced that they welcomed these changes.
AFCA Chief Ombudsman, David Locke, said this was good news and will help firms improve, which will in turn lead to better outcomes for consumers.
“ASIC’s aim to match dispute resolution data with AFCA data will provide a robust and accountable way to make sure the system is fully transparent,” Locke said.
This issues which the consultation process as listed on the ASIC website:
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 use to take a systemic focus to complaints handling; and
the details of the new framework for recurrent complaints data reporting to ASIC.