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Signs of ‘significant compliance issues’ in super fund dispute resolution

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ASIC has conducted surveillance on the complaints handling of funds.

Indicators of significant compliance issues have been identified during ASIC’s surveillance on the status and timeliness of complaints handling by superannuation funds.

The corporate regulator has urged super trustees to review their internal dispute resolution (IDR) arrangements after it found potential issues relating to the recording of complaints, response timeframes, informing complainants of delays and process failures.

“The first stage of ASIC's surveillance about internal dispute resolution practices of trustees has identified some problem areas that need fixing,” said ASIC commissioner Danielle Press.

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“We want trustees that have fallen behind to strengthen their internal dispute resolution arrangements to make sure that member complaints are handled in an effective, fair and timely way.”

ASIC gathered and analysed complaints handling data from 35 trustees of 38 funds managing over $1.5 trillion in assets for around 16.5 million members in the first stage of its surveillance to examine compliance with Regulatory Guide 271 that took effect in October last year.

In relation to the recording of complaints, the regulator noted that its analysis showed that funds recorded complaints at a rate of 30 for every 10,000 members. However, 10 per cent of the funds examined recorded less than 10 complaints for every 10,000 members.

“RG 271 requires trustees to record all member complaints,” ASIC noted.

“ASIC is concerned that the low complaint rate may be a result of some trustees failing to record all member complaints or adopting an inappropriately narrow definition of ‘complaint’.”

The data also revealed that 2.7 per cent of all IDR responses from the 38 funds were sent after the 45-day maximum time frame generally required under RG 271, and seven of the funds sent out 10 per cent or more of their IDR responses after 45 days.

“ASIC is concerned that trustees may be over-applying the limited exceptions to the maximum timeframe or not sufficiently monitoring how long complaints take to resolve,” it said.

Additionally, while RG 271 requires trustees to notify complainants of delays and their right to go to AFCA when a written response is not sent within 45 days, ASIC found that complainants were not notified nearly half of the time.

A third of the trustees also advised that there were degrees of process failures or errors in their IDR systems such as identifying or capturing complaints correctly, omitting mandatory content from IDR response letters or failing to send out IDR responses for some complaints.

In the lead up to the new enforceable requirements taking effect, the corporate regulator had stated that it was concerned that trustees were not adequately prepared.

“We expect all trustees to have in place effective arrangements that support expressions of dissatisfaction from their members and deliver fair, transparent and timely member outcomes,” said Ms Press.

“Trustees should continually monitor and update their processes to ensure these remain fit for purpose.”

ASIC said the next stage of its surveillance would involve checking how relevant trustees are addressing the concerns identified while closely examining a smaller sub-set of trustees.

It will also consider taking regulatory action where appropriate, with outcomes set to be communicated once the surveillance has been completed.

Signs of ‘significant compliance issues’ in super fund dispute resolution

ASIC has conducted surveillance on the complaints handling of funds.

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Jon Bragg

Jon Bragg

Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.

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