ASIC reviews internal dispute resolution procedures

ASIC has released Report 603, The consumer journey through the Internal Dispute Resolution process of financial service providers, which presents the findings of qualitative and quantitative research ASIC commissioned to explore and measure consumer experiences of the Internal Dispute Resolution (IDR) process across a range of financial service sectors.

The research found that:

  • Approximately 3.2 million Australian adults considered making a complaint to a financial service provider in the preceding 12 months (considerers) and 1.5 million adults actually made a complaint (complainants);
  • The major reasons for complaints were the same among considerers and complainants: almost half were about fees and charges (47%), a quarter about customer service issues (25%) and one-in-five about a decision made by the company (17%);
  • Confusion and uncertainty about how long the IDR process would take, how to initiate the process or whether they should even be in the process discouraged 38% of considerers from making a complaint.

Method of complaint

Nonetheless, almost one in five (19%) considerers expressed dissatisfaction to the firm in person, and a further 6% reported that they had messaged the company through social media. These two ways of expressing dissatisfaction could be considered the start of a complaint process, but their complaint was not actioned off the back of this contact.

Withdrawal of complaint

Almost one-in-five complainants (18%) withdrew from the process before reaching a conclusion. The leading reasons for withdrawing were not receiving a conclusion after chasing up the firm (45%), after not hearing from the company for an extended period of time (40%), or after receiving a poor response and realising that continuing with the complaint was too difficult (30%).

Obstacles related to transparency

The research found that:

  • Almost a quarter of complainants (26%) did not have the IDR process explained well to them at first contact, and almost a third (31%) did not have the expected timings of the IDR process explained;
  • Among all complainants in the holding pattern, only one quarter (26%) indicated they received an update on the progress of their complaint from the firm, two in three (67%) were dissatisfied with this lack of information;
  • Not enough progress updates (experienced by 53% of those who received a progress update);
  • Being unsure of how long they would need to wait for a decision (27% of complainants);
  • Most complainants (81%) had their complaint concluded within the statutory timeframe (45 days for most sectors, 90 days for superannuation). For the remaining complainants, only one in five (21%) had the External Dispute Resolution (EDR) process explained to them; and
  • Three in four complainants receiving an unfavourable conclusion felt it was important to receive an explanation from the provider either in writing (75%) or over the phone/in person (78%). However, only 45% received an explanation of the outcome.

The research provides useful information for a review of IDR procedures.

AFCA’s first month

AFCA, which commenced on 1 November this year, has reported that it received so far 6,522 complaints in its first month from consumers and small businesses, about financial products or services.

Averaging about 310 complaints per business day, AFCA has so far experienced an increase of more than 47% in complaints received, when compared to the three predecessor schemes.

Most of the complaints AFCA has received have been about credit (45%), followed by general insurance (21%) and deposit-taking (10%). 8% of complaints received were about superannuation. While most complaints were lodged by individual consumers, 460 complaints were lodged by small businesses.

Print Friendly, PDF & Email

Your Compliance Support Plan

We understand you need a cost-effective way to keep up to date with regulatory changes. Talk to us about our fixed price plans.