ASIC Strengthening Dispute Resolutions (IDR) in Finance Sector

ASIC has announced a number of new measures to strengthen the integrity and effectiveness of the IDR systems of financial firms.

In May 2019, the Australian Securities & Investments Commission (ASIC) announced a number of new measures to strengthen the integrity and effectiveness of the internal dispute resolution (IDR) systems of financial firms. This was on the back of the regulatory body publishing its findings into the customer experiences of the IDR process across a range of financial service sectors in late 2018.

The report highlighted inadequacies across a number of components within the IDR process implemented within financial firms.  A major theme across most of the obstacles facing a consumer when raising a complaint was the lack of transparency of the process and the lack of visibility of the status of a complaint.

ASIC is responsible for overseeing the operation of Australia’s financial services dispute resolution framework, which includes:

• setting the standards and requirements for the internal dispute resolution (IDR) systems of financial firms; and
• oversight of the Australian Financial Complaints Authority (AFCA), which is a single external dispute resolution (EDR) body established to deal with complaints about financial products and services if a complaint cannot be resolved within a financial firm’s IDR process

Based on the report findings, ASIC is proposing changes to Regulatory Guide 165 (RG 165): ‘Licensing: Internal and external dispute resolution‘, which set out requirements for IDR processes.

Some of the noteworthy proposed changes are:

• Financial firms to record all complaints received regardless of the timeframe within which they are resolved, including those resolved immediately at the first point of contact
• Financial firms to record an identifier or case reference number for each complaint received
• Financial firms to collect and record a prescribed data set for each complaint received
• Financial firms to provide IDR data reports to ASIC as unit record data and report to ASIC at six monthly intervals Financial firms to identify and escalate possible systemic issues in accordance with new ASIC guidelines
• ASIC to publish IDR data at both aggregate and firm level
• ASIC to reduce the maximum IDR timeframe for complaints from 45 days to 30 days (some exceptions apply)
• Financial firms to comply with all requirements set out in RG 165 immediately upon publication

ASIC has published the detailed proposed changes in a consultation paper and has invited the public to comment on the document.  ASIC will also be holding stakeholder meetings with key financial firms to discuss the proposals.  Below is a timeline of events for the consultation process:

AFCA has supported the proposed changes to the IDR processes across multiple financial services sectors. In a recent media release, AFCA Chief Ombudsman and CEO David Locke welcomed the proposed changes to the policy, “Increased transparency is good news” he said. “It will help firms to continuously improve, and that will be good for the firms and their customers alike”.

To view the consultation paper, please visit the ASIC website.