The Australian Securities and Investments Commission (ASIC) has issued Consultation Paper CP 311 Internal dispute resolution on proposed changes to Regulatory Guide 165 Licensing: Internal and external dispute resolution including a proposed framework for mandatory Internal Dispute Resolution (IDR) data reporting by financial firms to ASIC.

The proposed new guidelines contained in consultation paper 311 include a strict set of rules for the acceptance, response times and reporting of customer complaints.

The regulator believes the often confusing approach to how complaints are handled inside financial services licensees, credit licensees, super funds and insurance companies discourages customers from lodging complaints and leads to one in five complainants abandoning the process part way through.

With respect to complaint response times, ASIC proposes to:
(a) reduce the maximum IDR timeframe for superannuation complaints and complaints about trustees providing traditional services from 90 days to 45 days;
(b) reduce the maximum IDR timeframe for all other complaints (excluding credit complaints involving hardship notices and/or requests to postpone enforcement proceedings and default notices where the maximum timeframe is generally 21 days) from 45 days to 30 days; and
(c) introduce a requirement that financial firms can issue IDR delay notifications in exceptional circumstances only.

The draft updated RG 165 that requires financial firms to:

• deal with all expressions of dissatisfaction that satisfy the definition in AS/NZS 10002:2014 of ‘complaint’ under their IDR processes. The AS/NZS 10002:2014 definition expands the concept of ‘complaint’ to include expressions of dissatisfaction made ‘to or about’ an organisation. ASIC considers that this should capture complaints made by identifiable consumers on a firm’s own social media platform(s);
• comply with a new definition of small business. ASIC proposes to modify the definition of ‘small business’ in the Corporations Act to align it with the small business definition in the AFCA Rules: A Primary Producer or other business that had less than 100 employees at the time of the act or omission by the Financial Firm that gave rise to the complaint;
• record all complaints received, including those resolved immediately at the first point of contact. Firms will not, however, be required to provide an IDR response for complaints resolved to a complainant’s satisfaction within five business days of receipt;
• record a unique identifier and prescribed complaints data for each complaint received;
• report IDR data to ASIC every six months;
• provide IDR responses to complainants that satisfy ASIC’s minimum content requirements;
• provide IDR responses to complainants within reduced maximum IDR timeframes; and
• identify and escalate possible systemic issues in accordance with ASIC’s requirements.

ASIC aims to release the new IDR standards (in a new Regulatory Guide 165) by December 2019.