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ASIC releases dispute resolution guide

The regulator has published its draft standards for internal dispute resolution reporting, which will be tested in a pilot across the financial industry in coming months.

The mandatory internal dispute resolution (IDR) data reporting framework will implement standards for data collection on customer complaints across companies and start public disclosure.

ASIC is implementing the scheme with an aim to improve transparency, assist consumer decision making and allow firms to benchmark themselves against their peers. The framework will also reportedly allow the regulator to identify emerging issues.

The new reporting documents, released on Monday (19 July), include a data dictionary and data glossary, which will be tested in an upcoming pilot of the regime across financial sector subsectors, in October.

The dictionary sets out information that firms will be required to collect and report to ASIC, while the glossary provides explanations of key terms in the dictionary.

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Financial firms have been told to start considering how to map their own complaints systems to the data dictionary.

The standards will apply to Australian financial services (AFS) licensees, credit licensees, credit representatives, unlicensed product issuers, unlicensed secondary sellers, fintechs, trustees of regulated superannuation funds (other than self-managed superannuation funds or SMSFs), and unlicensed COI (carried over instrument) lenders, among others.

The dictionary has not prescribed a “one size fits all” approach, rather saying firms should take into account factors such as the size of the business and number of staff, products and services offered, and volume and size of transactions and the nature of their customer base.

A number of companies had alerted ASIC that the data required does not align with what they already collect, and that the product or service and issue categories are too granular.

“We acknowledge that some of the IDR reforms in this guide represent change for some financial firms,” the dictionary stated.

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“Firms will need to undertake internal capacity building, establish clear lines of reporting and accountability, develop processes and systems and upskill staff who are responsible for dealing with complaints.”

Notably, a number of firms had told the regulator that it would be “inappropriate to capture the identities” of an individual financial adviser, credit representative or authorised representative, with concerns around privacy.

ASIC relented, removing data elements around identifying individuals – but it will still require information on whether a complaint is about the authorised representative of a financial services or credit licensee.

The pilot documents have been developed through two rounds of public consultation and are meant to align with the reporting approach of the Australian Financial Complaints Authority (AFCA), in order to develop an end-to-end picture of financial system complaints.

Key changes made in response to consultation include:

  • Removing free text fields;
  • Removing mandatory reporting of demographic information;
  • Allowing flexibility to including multiple products/services and issues per complaint

ASIC stated it is “aware” that most financial firms will already be collecting more granular and detailed data about the complaints they receive.

It has also signalled there may be some changes to the dictionary and glossary if any issues arise during the pilot, but ASIC expects such changes will be kept to a minimum.

The new standards laid out in the dictionary will apply for complaints received from 5 October.

The current regulatory guide for internal and external dispute resolution will continue to apply to complaints until 5 October, when the new standards come into effect. ASIC will withdraw the predecessor regime one year after the new one begins (5 October 2022).

On Friday, the government released draft legislation for royal commission reforms, including requirements for the ‘compensation scheme of last resort’.

The scheme, in its current form, would allow customers who have lodged complaints with AFCA, and the case determined in their favour, to receive compensation up to $150,000 where the firm is not able to pay it.

It will be funded by an industry levy.

[Related: DDOs extended without consultation: COBA]

ASIC releases dispute resolution guide
ASIC releases dispute resolution guide
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Sarah Simpkins

Sarah Simpkins is the news editor across Mortgage Business and The Adviser.

Previously, she reported on banking, financial services and wealth management for InvestorDaily and ifa.

You can contact her on This email address is being protected from spambots. You need JavaScript enabled to view it..

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