ASIC consults on lifting standards and transparency of complaints handling

The Australian Securities and Investment Commission (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.

Announcing the consultation, 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.”

“Consumers expect and need a fair, timely and effective way to have their complaints dealt with, and to be provided redress where appropriate.”

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.

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.

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

AFCA Chief Ombudsman and CEO David Locke welcomed the proposed changes, “Increased transparency is good news” he said.

“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.”

Chester said, “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. 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.”

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.