Dispute resolution under National Consumer Credit

ASIC’s updated Regulatory Guide 165 Licensing: Internal and external dispute resolution released on 7 May 2010 tells you what you need to include in your internal dispute resolution (IDR) arrangements if you’re an Australian Credit Licensee or a credit representative.

Here are some of the key points:

  • Your IDR procedures have to fit with some of the definitions and principles in the Australian Standard on complaints (AS ISO 10002 -2006) – the definition of “complaint”, and the guiding principles 5.1 (Commitment), 6.4 (Resources), 8.1 (Collection of information) and 8.2 (Analysis and evaluation of complaints).
  • The definition of “complaint” in the Australian Standard is: “An expression of dissatisfaction made to an organisation, related to its products or services, or the complaints handling process itself, where a response or resolution is explicitly or implicitly expected.”
  • The National Consumer Credit Protection Act talks about “disputes” rather than “complaints”. Where the Act refers to a dispute, ASIC considers this to have the same meaning as complaint.
  • Your IDR procedures must also have a system for informing complainants about the availability and accessibility of your external dispute resolution (EDR) scheme.
  • Where the complaint or dispute is resolved to the customer’s satisfaction by the end of the next business day, you don’t have to follow the full IDR process (but ASIC encourages you to do so where possible).
  • You should immediately acknowledge receipt of complaints or disputes and address them promptly.
  • The final IDR response must be provided within a maximum of 45 days.
  • This timeframe does not apply in the case of a dispute about a default notice – instead, a 21 day limit applies here.
  • While the default notice dispute is being handled at IDR, and for a reasonable time after that (at least 14 days), you must not commence or continue legal proceedings or any other enforcement action, unless the statute of limitations is about to expire.
  • You must have a dedicated telephone number and where possible fax number, postal address and email address to accept and handle hardship applications.
  • Disputes involving hardship applications or postponement of enforcement proceedings must be treated as urgent matters.
  • Under the National Credit Code a credit provider has 21 days to consider a request for hardship relief or postponement of enforcement proceedings. Once these 21 days are up, the IDR stage ends and the customer should be referred to EDR if the matter has not been resolved. Similarly, if the credit provider reaches agreement with the disputant, under the National Credit Code the credit provider is required to confirm this in writing within 30 days. There is no further time under the IDR process for a dispute about this, and the matter should be referred to EDR if it has not been resolved.
  • The right to go to EDR and the EDR’s contact details must be included when the disputant is advised in writing of the outcome of the hardship or postponement request, or when the terms of approved hardship or postponement are confirmed in writing to the customer.
  • A disputant may lodge their dispute directly with the EDR where the dispute involves a default notice that has been issued after a request for hardship assistance or postponement of enforcement proceedings has been declined.
  • IDR procedures must be documented. This must cover procedures and policies, remedies available and internal structures and reporting requirements.
  • If you outsource IDR procedures, you’re still responsible for them.
  • While you are registered with ASIC but waiting on your Australian Credit Licence (ACL), your existing IDR procedures will be fine if they comply with the requirements set out in the May 2009 version of RG 165.
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