ASIC proposes mandatory data reporting standards to improve internal dispute resolution processes.

Key takeouts

ASIC has commenced public consultation on improving standards for internal dispute resolution (IDR) processes.

It proposes to update Regulatory Guide 165 (RG 165) to reflect recent consumer research by ASIC and findings from ASIC’s onsite Close and Continuous Monitoring (CCM) supervisory program, the commencement for the Australian Financial Complaints Authority (AFCA) last year and the complaint management standards in AS/NZS 10002:2014.

Key observations and issues:

  • ASIC has proposed mandatory data reporting against set variables, including the identification of recurring or systemic issues. Financial firms will need to revise and strengthen their current IDR reporting processes and systems to ensure it meets ASIC's requirements.
  • Under ASIC's proposed re-definition of a complaint, firms will need to review the definition of a complaint in their internal policies. Firms will also need to consider when an expression of dissatisfaction is first made by a consumer, including complaints made via social media.
  • Firms will need to revise their complaint handling procedures under ASIC’s proposed reduction of maximum IDR response time frames. Firms will also need to review their quality assurance processes to ensure IDR responses satisfy ASIC's minimum content requirements.
  • ASIC has lifted its standards on the identification and reporting of systemic issues. Under the proposed changes, firms must include metrics and analysis of consumer complaints and systemic issues in reports to board and executive committees.
  • Firms must review their remediation processes and ensure closer interaction of remediation and IDR teams. Under the proposed changes, where a complaint is made about a firm's decision as part of its remediation process, consumers must be directed to AFCA.

Key elements of ASIC's proposals are outlined below.

Internal dispute resolution (IDR) reporting

ASIC proposes to require:

  • All complaints to be recorded from 30 June 2020, including those resolved immediately.
  • Financial firms to report against a set of prescribed variables to ASIC every six months. This will include up to 29 items of information on each complaint, including demographic information, whether the complaint is opened, re-opened, withdrawn or closed during the period, details of the complainant's desired outcomes and the amount of financial compensation (within specified ranges). Firms will be required to record this information from 30 June 2020 and report to ASIC from 30 June 2021.
  • Financial firms with large volumes of complaints to use specialised complaints software or to integrate complaint management data fields into existing consumer relationship management systems.

IDR data will form part of a broader dataset used by ASIC to target ongoing surveillance and enforcement activities. ASIC will also report IDR data at both aggregate and firm level.

Questions asked by ASIC include:

  • Should complaints be reported over multiple reporting periods when there has been no change in status?

Revised definition of 'complaint'

ASIC has sought feedback about its revised definition of a 'complaint' and standards, which include:

  • An expression of dissatisfaction made to or about an organisation, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.
  • The expression of dissatisfaction is not merely triggered by the referral of a complaint to a specialist complaints or IDR team.
  • Expressions of dissatisfaction made through the firm's social media platform.

Systemic issues and remediation

ASIC is concerned that firms are not identifying systemic issues sufficiently and that systemic issues are being escalated to EDR schemes before they are identified and dealt with.

ASIC proposes to require:

  • Clear accountabilities for complaints handling functions, including setting thresholds for and processes around identifying systemic issues that arise from consumer complaints.
  • Reports to the board and executive committees to include metrics and analysis of consumer complaints including about any systemic issues that arise out of those complaints.
  • Staff who record new complaints and/or manage complaints to consider whether each complaint involves potentially systemic issues.
  • Regular analysing of complaint data sets.
  • Root-cause analysis on recurring complaints and complaints that raise concerns about systemic issues.
  • Prompt escalation of possible systemic issues to appropriate areas for action.
  • Processes and systems to ensure that systemic issue escalations are followed up and reported on internally in a timely manner.

Under the proposed changes, ASIC will expect:

  • Closer interaction of remediation processes and IDR and the identification of systemic issues through trends in IDR complaints.
  • Consumers to be directed to AFCA and not to the firm's IDR process for complaints about a decision made by a firm as part of its remediation process.
  • Financial firms to conduct root cause analysis on recurring complaints and complaints that raise systemic concerns to identify underlying causes.

Reducing maximum timeframes for IDR responses

ASIC has proposed to reduce maximum IDR response timeframes from 31 March 2020:

  • From 90 days to 45 days for superannuation complaints;
  • From 45 days (90 days for traditional trustee complaints) to 30 days for other complaints. The maximum period for credit complaints involving hardship notices and/or requests to postpone enforcement proceedings and default notices will continue to be 21 days.

Any role played by customer advocates will not extend these periods.

Questions asked by ASIC include:

  • Should maximum periods for all complaints be reduced to 30 days now?

Accessibility and transparency

ASIC has also sought feedback on its expectation of financial firms to improve the accessibility and transparency of the complaints process, including:

  • Providing a unique complaint identifier to the complainant, even if resolved immediately.
  • Requiring firms to provide consumers with reasons for rejecting or partially rejecting a complaint. This applies to customer advocates too.
  • The effective communication of a consumer's right to complain to AFCA in its publicly available complaint management policy, brochures, relevant website FAQs and call centre scripting.
  • Improving accessibility of the IDR process, including ensuring information is provided to the public in a range of languages and formats such as large print, braille, audiotape, AUSLAN video presentations and offering translation services to complainants.

Next steps

ASIC seeks public input on the consultation documents by 9 August 2019 and aims to release new IDR standards by the end of 2019. A separate consultation on the publication of IDR data will commence in early 2020.