ASIC has initiated its public consultation on new standards for how financial firms handle consumer and small business complaints.
The proposed standards are designed to improve the way complaints are dealt with across the system and make firms’ complaints handling performance transparent.
Firms will be required by ASIC to meet the new standards when they deal with complaints through their Internal Dispute Resolution (IDR) arrangements.
The IDR arrangements is intended to be an opportunity for a firm to resolve and address a problem before a complaint is escalated to AFCA.
In announcing the consultation, ASIC deputy chair Karen Chester said that it had become clear that there was room for improvement in handling consumer complaints.
“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,” she said.
Ms Chester said consumers expected their complaints to be dealt with in a fair and timely manner and that firms had been lacking in those areas.
“The absence of such effective redress, and the failure of firms to identify and look into systemic complaints, were key findings of the FSRC and the Prudential Inquiry into the CBA.”
The proposed new standards may include data reporting requirements and are intended to forge effective working relationships between IDR’s and AFCA.
“With the benefit of broad consultation, ASIC’s new standards will lift complaints handling performance of firms and ultimately consumer outcomes and fairness of the financial system. And transparently so.
“These standards will also apply in their entirety to all APRA regulated superannuation funds,” Ms Chester said.
The standards have been informed by recent consumer research by ASIC, which found one in seven complainants found it difficult to find the financial firm’s details to make a complaint.
It also found that 27 per cent of respondents did not know how long they would have to wait for a decision and that 45 per cent of complainants who received an unfavourable outcome received an explanation of the decision.
The proposed standards will increase transparency, said Ms Chester, and she hoped it helped inform the consumer of how they should be treated.
“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,” she said.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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