On 5 October 2021, ASIC’s Regulatory Guide RG 271 Internal Dispute Resolution (RG 271) came into effect. RG 271 sets new standards and requirements for complaints-handling across the financial services sector.
The Customer Owned Banking Code Compliance Committee (COBCCC) wishes to draw the attention of the customer owned banking industry to the updated complaints handling guidance which, importantly, includes enforceable obligations.
Key Promise 6 and Part D Sections 27, 28 and 29 of the Customer Owned Banking Code of practice (the Code) outlines subscribers’ current complaint handling obligations. The Code currently allows for standard complaints to be resolved within 45 days.
The biggest changes arising from RG 271 for the customer owned banking industry relate to
- IDR timeframes, with standard complaints needing to be resolved within 30 calendar days of the complaint being made and,
- for credit-related complaints involving hardship, no later than 21 days.
- acknowledgment of complaints, which will be required within 24 hours (or one business day) of receiving the complaint, or, if that is not possible as soon as practicable;
- recording and reporting of complaints; and
- enhanced requirements in relation to identification and rectification of systemic issues.
The new obligations and timeframes under RG 271 override the current Code obligations. The new Code will require, as a minimum, compliance with RG 271.
RG 271 notes that
- timeliness is essential for effective complaint management.
- firms should aim to resolve most complaints quickly and at the first point of contact.
ASIC expects that:
- Firms to take a “proactive approach” to identifying implicit as well as explicit complaints, and notes that “a consumer or small business is not required to expressly state the word ‘complaint’ or ‘dispute’, or put their complaint in writing, to trigger a financial firm’s obligation to deal with a matter”. Code subscribers should not categorise an expression of dissatisfaction that meets the definition of ‘complaint’ as ‘feedback’, an ‘inquiry’, a ‘comment’ or similar (and thus not to be dealt with by IDR process).
- Regardless of a firm’s structure, it is a complainant’s expression of dissatisfaction that triggers the obligation to deal with the matter, not the referral of a complaint to a specialist complaints or IDR team.
- Complainants should not be disadvantaged by the use of multi-tier IDR processes by financial firms.
- For the financial dispute resolution system to be fully effective, financial firms need to establish appropriate links between their IDR process and AFCA.
- Financial firms must have robust systems in place to ensure that possible systemic issues are investigated, followed up and reported on.
- Its standards are adapted to suit the nature, scale and complexity of any business; that Boards, chief executives and senior management are actively interested in and support effective complaint management; that a firm’s culture recognises that everyone has a right to complain, is open to receiving complaints and demonstrates a commitment to resolving complaints through action; and encourages complaints.
RG 271 is a welcome development in striving for better complaint handling practice. Effective IDR helps to builds trust between Code subscribers and customers as well as throughout the wider community. Processes that support and improve this requirement should be built into the systems and cultures of every Code subscriber.
The COBCCC believes resolving complaints and disputes in a fair and timely way, and documenting IDR processes in order to identify problem areas and continuously improve them, is not just a matter of fulfilling the enforceable obligations set out in RG 271 and the Code, but good industry practice and an important part of putting consumers at the center of customer owned banking institutions.