DISPUTE RESOLUTION: ENSURING RESPONSIBILITY

We must trust super funds to deliver our best outcome possible in retirement and we should expect the same level of responsibility and commitment when it comes to dispute resolution. 

In 2010 I studied SIS Legislation. At the time, I understood the R in RSE (Registrable Superannuation Entity) to mean ‘Responsible’. It was an easy mistake to make.

Here we are a decade later and the Government’s regulatory agenda, post Royal Commission, is systematically improving the financial services industry in Australia, restoring integrity to its pillars and ultimately ensuring that ‘responsibility’ is NO mistake when it comes to RSEs.

Dispute Resolution, which sits at the very core of any responsible organisation, is of course a key focus of the regulatory agenda. As a result of the COVID-19 pandemic, we’ve seen depression-level financial hardship and consumer vulnerability, so ASIC considers it essential that Internal Dispute Resolution (IDR) performance is significantly improved.  Successful IDR processes go a long way to reducing customers’ emotional grievances (which is a leading cause of escalations) and help to improve products and services through effective use of complaints data. This ultimately reduces the overall number of complaints and improves responsibility over time.

In 2018, following Professor Ian Ramsay’s report: Review of the Financial System: external dispute resolution and complaints framework¹,  AFCA was established and we said goodbye to the Financial Services Ombudsman, the Superannuation Complaints Tribunal and the Credit and Investment Ombudsman.

The report also highlighted that data on Internal Dispute Resolution (IDR) outcomes was limited and inconsistent across organisations and the effectiveness of IDR processes could not be determined. It recommended the establishment of industry standard reporting. ASIC’s RG 165 was revised and in July this year the regulator published RG 271 Internal Dispute Resolution, outlining updated IDR standards and requirements which take effect on 5 October 2021.

Here’s a look at what’s changing:

1. Updating the definition of ‘Complaint’²

A complaint will be considered as “[An expression] of dissatisfaction made to or about an organization, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.”

By broadening this definition, social media will now be a legitimate complaint channel. Funds are also being directed to take an active approach to identify complaints. Initially, the interpretation meant funds would need a dedicated resource to trawl through digital platforms for any kind of wording about them. Instead, complaints are to be identified on accounts owned by the fund and the complainant must be identifiable and contactable.

2.  Reduced Timeframes³

In research conducted by Nature and published in ASIC’s Report 603 The Consumer Journey through the Complaint Resolution process of Financial Service Providers, 86% of superannuation complaints were concluded within the previous timeframe of 90 days.  Below is a table of the new timeframes:

Type of complaint	Current maximum	New maximum
Superannuation and traditional trustee services	90 days	45 days
Superannuation death benefit distributions	90 days	90 days
Other financial services complaints	45 days	30 days

Different timeframes apply to:

• complaints about a traditional trustee (see RG 271.76–RG 271.78);
• complaints about superannuation trustees (see RG 271.79);
• complaints about superannuation death benefit distributions (see RG 271.80–RG 271.85); and
• certain types of credit complaints (see RG 271.86–RG 271.101).

3.  Reasons for Decisions are Adequately Explained

Complaint responses are often too reliant on system-generated responses and automation capability which does not provide rationale for decisions specific to individual complaints. Data gathered from consumer research said 43% of complainants believed the rationale for the decision is important and 25%, extremely important⁴.

When a financial firm rejects or partially rejects a complaint, the IDR response will need to clearly set out the reasons for the decision by:

• identifying and addressing the issues raised in the complaint;
• setting out the financial firm’s findings on material questions of fact and referring to the information that supports those findings; and
• providing enough detail for the complainant to understand the basis of the decision and to be fully informed when deciding whether to escalate the matter to AFCA or another forum.

4.  IDR Standards (Enforceable)

The appendix of RG 165 contained guiding principles against each of the 4 Requirements Sections of the Guide. In RG 271 there are 34 Enforceable Standards across 8 Requirements Sections:

• Commitment and Culture
• Enabling Complaints
• Resourcing
• Responsiveness
• Objectivity and Fairness
• Policy and Procedures
• Data Collection, Analysis and Internal Reporting
• Continuous Improvement

5.  Identifying and Escalating Systemic Issues

While Nature were compiling the research for ASIC’s Report 603, ASIC were conducting on-site visits to have a look at what funds were doing, when they identified issues impacting multiple members. General observations showed that systemic issues were not proactively identified or addressed. Complainants would often pursue External Dispute Resolution processes before Funds began to rectify an issue.

In RG 271, systemic issues complaints ending up at AFCA will be reported to the regulator within 15 business days.

These changes to dispute resolution, along with all the other regulatory changes to be implemented will, of course, take a lot of grit and determination from all who are involved. However, IQ comprehensively understands what these changes mean and is committed to helping clients sail through the rising tide of regulatory transformation washing over the industry.

Whilst it may have been a mistake, on my part, to think that the R in RSE meant ‘Responsible’, I’ll consider it a Freudian slip. “Responsibility” is exactly what the Government is enforcing and the financial services industry has a bright future, as do we … its customers.

By David Shortt (Operations Consultant)