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ASIC’s internal dispute resolution review – what were their findings?

After almost 12 months of the new internal dispute resolution (IDR) regime being in force, ASIC has conducted a review and has released its findings which should be taken on board by all AFSL and ACL holders. Although the review was only in relation to whether retail superannuation trustees are complying with the new obligations, there are take-aways for everyone.

What did ASIC find?

  1. Not all client complaints were recorded.

Under ASIC RG 271 Internal Dispute Resolution (RG 271), licence holders are required to record the details of all complaints received. Licence holders should ensure that they:

  • have a system in place that allows them to record and keep track of the progress of each complaint; and
  • are not adopting a narrow definition of ‘complaint’ which in turn leads to a low number of client communications being recorded in complaints data.

ASIC’s review found that complaints were being recorded at an average rate of 30 for every 10,000 superannuation members. However, a small number of superannuation trustees recorded less than 10 complaints for every 10,000 members.

  1. IDR Response Timeframes were not always adhered to

RG 271 also requires licence holders to provide an IDR response to a complainant specifying the outcome of their complaint within mandated timeframes. For standard complaints, an IDR response is to be provided within 30 calendar days after receiving the complaint (note: different timeframes apply in specific cases). RG271 also allows for IDR responses to be sent outside of this timeframe if certain circumstances exist e.g., in a situation where the resolution of the complaint is particularly complex.

Licence holders should ensure that:

  • they have adequate procedures in place to monitor the progress of each complaint and
  • there is a process in place so that mandated timeframes are adhered to.

As a result of the review, ASIC suggests licence holders review their IDR processes to ensure the circumstances which exist when sending a delayed IDR response are not interpreted too broadly.

In ASIC’s review, ASIC found that 2.7% of total IDR responses were sent outside of the specified timeframe for superannuation trustees.

  1. Complainants were not informed of delays

Licence holders must inform complainants that they have the right to pursue their complaint with the Australian Financial Complaints Authority (AFCA) in a situation where the complaint is not resolved within the maximum IDR timeframe. Licence holders should review delay notifications being sent to clients to ensure there is a reference to AFCA and provide details about how the complainant can access AFCA.

ASIC’s review found that in nearly 50% of cases, complainants were not notified of their right to escalate the complaint to AFCA.

  1. IDR process failures

Licence holders should continually review and adjust their IDR procedures to enable better complaints management. This is particularly relevant where a failure in IDR procedures is identified.

In ASIC’s review, ASIC found that 1 in 3 superannuation trustees informed ASIC of failures or errors in their IDR processes.

What did ASIC review?

The purpose of ASIC’s review was to gather and analyse data on the status and timeliness of complaints handling. ASIC reviewed 35 superannuation trustees covering a total of 38 superannuation funds. Between 5 October 2021 and 28 February 2022, a total of 49,029 complaints were received by the superannuation funds. You can access a summary of ASIC’s findings here.

Further Reading

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