Posted April 17, 2020
Posted By Meghann Cannon
ASIC’s proposal to raise the bar for handling customer complaints within financial services industry
23 May, 2019
Prepared by Ella Cameron
On Wednesday 15 May 2019, ASIC released a draft of its proposed changes to the way financial service providers are required to handle complaints as a result of ASIC’s consumer research. This research identified several areas for improvement, which include:
- the length of time taken by financial service providers to respond to consumer complaints;
- the availability of information about how to make a complaint;
- poor explanation of Internal Dispute Resolution (IDR) processes; and
- insufficient explanations provided for unfavourable decisions made against the complainant.
The key changes can be summarised as follows:
- Firstly, ASIC seeks to introduce new data reporting requirements. Financial firms will need to report their IDR activities to ASIC every 6 months. This aims to allow for greater transparency and enable consumers to remain informed about how firms are treating their customers and handling complaints.
- ASIC’s consumer research revealed that timeliness is an essential aspect of complaint management and maintaining positive client-firm relationships. Financial firms will need to acknowledge receipt of a complaint within 24 hours, or one business day. If this is not possible, it must be acknowledged as soon as practicable.
- It has also been suggested that the definition of what constitutes a complaint be expanded. Previously, in order for a comment to treated as a complaint, it needed to be made directly to the organisation. Under the new requirements, a negative comment only needs to be about the relevant organisation for it to be treated as a complaint. This aims to capture complaints made via a firm’s social media platforms by identifiable consumers but will have a wide reaching impact if it is implemented.
- ASIC has raised concerns in relation to the quality of IDR responses provided to complainants from financial firms across the board. To combat this, the new regulations will outline what each response should include (the “minimum requirements”). Each response must contain enough information for the complainant to understand the reasoning behind a decision. It must also highlight the complainants right to pursue the complaint with AFCA.
- The new requirements aim to re-enforce the importance of firms taking a systemic approach to complaints handling. When systematic issues are identified, organisations should have processes in place to ensure that these concerns are dealt with appropriately.
These amendments are intended to result in higher levels of customer satisfaction and will provide ASIC with insight into the effectiveness of firms internal complaints handling procedures. ASIC is seeking public input until 9 August 2019 and aims to release the new standards by the end of 2019. For our “Rescue” portal subscribers, when the final changes are effective, we will update your complaints procedures!