New ASIC Dispute Resolution Guide
LegalComplianceCorporate14/07/2021 12:00:00 AM

Company Law - New ASIC Dispute Resolution Guide

On 30 July 2020, the Australian Securities and Investments Commission (ASIC) released Regulatory Guide 271: Internal dispute resolution (Guide). The Guide will come into effect on 5 October 2021.

The purpose of the Guide is to assist financial firms in dealing with complaints by having an appropriate internal dispute resolution (DR) system in place.

This article sets out who the Guide applies to, how to ensure compliance, and recommended next steps.

Who does it apply to?

ASIC’s new regulatory guide will apply to financial firms. “Financial firms” is defined broadly, to include (amongst others):

  • Australian financial services licensees (AFSLs),
  • Trustees of regulated superannuation funds (other than self-managed superannuation funds),
  • Australian credit licensees,
  • Trustees of approved deposit funds, and
  • Retirement savings account providers.

The details

An appropriate internal DR system must meet ASIC’s requirements and standards, that is, consumers and small businesses must have access to “fair, timely and effective dispute resolution”. The Guide explains what financial firms must do to have an appropriate internal DR system in place, and certain parts of the standards, as outlined in the guide, are enforceable by ASIC.

ASIC expects financial firms to take a proactive approach in identifying complaints. Complaints should not have to be in writing and the words “complaint” or “dispute” should not be explicitly required in order to trigger a firm’s internal DR process.

The following table sets out the main provisions of the new Guide:

Table title

No:  Provision:  Details:
1. Definition of “complaint” Expanded to include complaints relating to staff, and complaints where a response is legally required. 

2.

Outsourcing of DR process Financial firms are permitted to outsource all, or part, of their DR process, to another entity within their corporate group or to an external third party. However, the firm remains responsible for ensuring that any outsourced firm complies with the Guide.
 
 
3. Complaints must be recorded Financial firms must have an effective system in place for recording complaints data, in order to track the progress of each complaint. Firms are also required to report on complaints data to senior management/the Board on a regular basis. 
4 Complaints should be acknowledged This is not an enforceable requirement; however, it is expected that financial firms will acknowledge a complaint within 24 hours, or as soon as practicable. 
5. Reduced timeframe for responding to complaints From 5 October 2021, an internal DR response must be provided within 30 days of the complaint being received, as opposed to the previously allowed 45 days. The new 30-day timeframe also applies where complaints are escalated to a customer advocate.

Different timeframes apply for other types of complaints, including complaints relating to superannuation death benefit distributions and credit-related complaints. 
6. Additional time for responding to complaints (Delay Notification) 

A financial firm may be provided with additional time to respond to a complaint, but only where:

  • Resolution of the complaint is particularly complex, and/or
  • Circumstances beyond the firm’s control are causing delays in resolving the complaint. For example, reliance on a third party.

In such cases, before the prescribed timeframe for responding to a complaint expires, the firm must provide the complainant with a Delay Notification which sets out the reasons for the delay and the complainant’s right to escalate the complaint to the Australian Financial Complaints Authority (AFCA).

7. Prescribed contents of an internal DR response

The information which must be included in an internal DR response, includes:

  • The final outcome of the complaint,
  • If the financial firm has rejected, or partially rejected the complainant’s claims, the response must set out, in sufficient detail, the reasons why, including findings on material facts and information to support those findings, and
  • Information on the complainant’s right to escalate their complaint to AFCA if they remain unsatisfied. 
8. Systemic issues  A systemic issue is one which may affect more than one complainant.

Although not an enforceable requirement, ASIC recognises that systemic issues can have more widespread impact. ASIC expects that financial firms will take prompt action to address systemic issues and initiate a remediation program for affected complainants. 
9. Accessibility and responsiveness  A financial firm’s internal DR process must be free to customers and easy to understand and use. Customers must be provided with information, at no additional cost, on how to use the internal DR process.

A firm’s internal DR process must also be adequately resourced at all times so that it operates fairly and efficiently, even during busy periods.

Complaint staff must be appropriately authorised to resolve complaints and implement any complaint outcomes in a timely fashion.

What next?

Financial firms will need to ensure that their internal DR processes and systems are updated, and comply with the new Guide, prior to 5 October 2021. Practical steps which financial firms can take, include:

  • Ensuring that they have an appropriate, robust and efficient internal DR system in place,
  • Ensuring that their staff have been adequately trained in the use of any new internal DR system,
  • Ensuring that all associated documentation and customer collateral in relation to any new internal DR system is prepared and ready to provide to customers well in advance of 5 October 2021,
  • Ensuring that they are adequately resourced to deal with the new reduced timeframe for responding to complaints, and
  • Proactively monitor all social media channels owned by the firm, for any complaints which may be received via those forums, in order to ensure that nothing is missed.

Regulatory Guide 165: Licensing: Internal and external dispute resolution will continue to apply to complaints received up to, and including, 4 October 2021. It will be withdrawn by ASIC on 5 October 2022.

Further reading

You can access the full suite of ASIC regulatory guides on our Pinpoint platform here.

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Sources: ASIC, RG 271 Internal dispute resolution, [regulatory guide], 30 July 2020, accessed 13 July 2021.

ASIC, RG 165 Licensing: Internal and external dispute resolution, [regulatory guide], 30 July 2020, accessed 13 July 2021.

CCH Pinpoint ®, ASIC RG 271 Internal dispute resolution, 30 July 2020, accessed 13 July 2021.

CCH Pinpoint ®, ASIC RG 165 Licensing: Internal and external dispute resolution, 30 July 2020, accessed 13 July 2021.

CCH Pinpoint ®, ASIC Regulatory Guide Library, accessed 13 July 2021.