In a statement, ASIC said the release of Regulatory Guide 271 had followed “extensive consultation with consumer and industry representatives”, as well as on-site visits of the major financial institutions.
Based on this research, the regulator said in its guidance paper, “delays and frictions in the IDR process” were creating “real barriers for consumers”, and firms would therefore need to acknowledge a complaint from a consumer within 24 hours, whether through a written or email response or through social media.
The licensee must provide a full response to the complaint within 30 calendar days of receiving it, ASIC said, or 45 days if the complaint was being made to a super trustee.
In responding to the complaint, licensees must inform complainants of their right to take the complaint to AFCA and include the ombudsman’s contact details, as well as clearly setting out the firm’s reasoning and “findings on material questions of fact” if the complaint was being rejected.
AFSLs must also provide “enough detail for the complainant to understand the basis of the decision and be fully informed when deciding whether to escalate the matter to AFCA or another forum”, ASIC said.
In the case of licensees who had employed customer advocates, the advocate should not be presented to the consumer as a necessary next step before they were able to take their complaint to AFCA, the regulator stated.
Firms also could not use the customer advocate to extend their allowable time to respond to a complaint, as the total response time needed to include both IDR and the customer advocate’s time.
The guidance said if a consumer appointed a representative to act on their behalf, such as a lawyer or family member, correspondence should occur between the licensee and the representative only unless the firm believed the representative was not acting in their best interests, in which case they were permitted to contact the consumer directly.
AFCA chief executive David Locke said the ombudsman welcomed the new guidance, which he said ensured IDR would be fair and accessible to consumers.
“IDR is the key to early resolution, which benefits consumers, financial firms and the financial sector broadly,” Mr Locke said.
“In our view, IDR should focus on helping financial firms to improve internal practices to avoid and resolve disputes. The updated guide will not only improve the quality of internal complaint resolution but will enable financial firms to deliver better outcomes for consumers and reduce the need to escalate complaints to external dispute resolution.”
ASIC said as a result of the COVID crisis it was giving firms extra time to transition to the new requirements, with the guidance to come into effect from 5 October 2021.
