ASIC to consult on review of existing rules for internal dispute resolution

The Australian Securities and Investments Commission (ASIC) will soon consult on a review of existing internal dispute resolution (IDR) guidance set out in Regulatory Guide 165, Licensing: Internal and external dispute resolution.

From February 2019, the regulator will be consulting publicly on this matter. The review will consider, inter alia:

• the definition of ‘complaint’ i.e. what triggers the IDR process;
• requirements for complaints that are resolved immediately or within 5 business days;
• maximum IDR timeframes across all complaints including superannuation related complaints, and
• written reasons for decisions made by superannuation trustees about complaints.

The regulator notes that the legislation establishing AFCA introduced specific IDR-related reforms, including the requirement for financial firms to report IDR performance data to ASIC on an ongoing basis. ASIC also has new powers to publish the IDR data on a firm-by-firm basis.

ASIC will be consulting on the proposed data collection and reporting framework as part of the broader policy consultation mentioned above.

All financial firms that deal with retail clients and all superannuation trustees must have IDR procedures that meet ASIC’s standards and requirements.

Today, the Australian regulator has published the key findings of research exploring the consumer experience of IDR procedures across the financial services sector.

Major findings of the research were:

• 17% of Australians aged 18+ considered making a complaint to a financial firm in the preceding 12 months (‘the considerers’);
• 8% went on to make a complaint (‘the complainants’);
• almost half of those who did not make a complaint reported that they did not think it would make a difference or it was not worth their time, and
• 18% of complainants dropped out or withdrew their complaint before it was concluded.

The list of obstacles encountered by complainants included:

• Structural obstacles: one in seven complainants found it difficult to find the firm’s contact details to make a complaint;
• Transparency obstacles: Almost a quarter of complainants did not have the IDR process explained well at first contact and 27% of complainants were unsure of how long they would need to wait for a decision, and
• Customer service obstacles: 28% of complainants reported feeling that they had not been listened to or heard and 22% felt they had been passed around to too many people or strung along.

ASIC reminds the public that in case one’s complaint is not satisfactorily addressed by a firm via its IDR procedures, one can address the newly established body for external dispute resolution – the Australian Financial Complaints Authority (AFCA).