Digital advice: ASIC provides guidance on AFSL compliance

When the new ISO 10002:2014 standard was released in July 2014, a quick comparison with the old International ISO 10002:2004 and Australian AS/ISO 10002:2006 standards (which are essentially the same document) revealed only minor technical amendments. Hardly worth writing about.

So when the Council of Standards Australia released AS/NZS 10002:2014 in October 2014, we nearly didn’t bother downloading it. After all, one could well be excused for presuming that the new Australian standard was simply another adoption of the international standard. Luckily, we did bother, because a simple comparison of the weight and thickness of the two documents immediately gave rise to a suspicion that something was amiss.

Yes, you guessed it – the new International Standard ISO 10002:2014 and the new Australian Standard AS/NZ 10002:2014 are in fact very different documents. Even reading this article you may have missed the fact that even though the numbering convention ‘10002’ is consistent, the new Australian Standard has dropped the ‘ISO’ that preceded the old 2006 standard.

For clarity, ISO refers to the International Organisation for Standardisation, the international standards governing body, whilst AS refers to Standards Australia – the Australian standards governing body.

So what is going on? What are the implications for Australian businesses and regulators that reference these standards?

As to ‘what’s going on’ – we are not sure. The reasons why there is now an Australia standard, as well as an ISO standard, have not been made explicitly clear.

As to the ‘implications for Australian businesses and regulators’ we are also not sure. Whilst many regulators refer to the AS/ISO 10002:2006 standard as providing useful guidance, at least one, the Australian Securities and Investments Commission (ASIC) is required to take AS/ISO 10002:2006 into account when making or approving standards or requirements for Internal Dispute Resolution procedures (Refer to ASIC Regulatory Guide 165 – Internal and External Dispute Resolution). So which standard now applies? Your guess is as good as ours.

Benefits of complaints handling standards

Before you give up and do your own thing, let us say that in general we are great supporters of standards.

Standards Australia produces standards for Australian industries, which are often adopted and mandated by regulators. Standards Australia has a policy of adopting International Standards wherever possible, hence why the international standard was adopted in AS/ISO 10002:2006.

The benefits of using standards to conduct business are explained by the ISO, which states that ‘International Standards are strategic tools and guidelines to help companies tackle some of the most demanding challenges of modern business. They ensure that business operations are as efficient as possible, increase productivity and help companies access new markets’. The same benefits apply to the application of standards produced by Standards Australia.

As noted above in some industries, such as financial services, it is a legal requirement to develop policies and procedures which comply with prescribed standards. For other organisations, compliance with standards may be recommended as part of good governance practices.

If you’ve read any of our previous blogs on complaints handling you will be aware of our support for organisations encouraging complaints from their clients. This is because complaints can identify issues in your business which provide opportunities for you to fix and improve your products and services. An effective complaints handling process is not just a customer service tool – it is a governance tool.

So, what are the differences between the new standards?

Both ISO 10002:2014 and AS/NZS 10002:2014 are revisions of ISO/AS 10002:2006. Both use the same numbering (10002:2014).

In the case of ISO/AS 10002:2006 and AS/NZS 10002:2014, both use:

  • (almost) the same title – ISO/AS10002:2006 ‘Customer satisfaction – Guidelines for complaint handling’ and AS/NZS 10002:2014 ‘Quality management – customer satisfaction – Guidelines for complaints handling’;
  • a similar structure; and
  • share similar headings.

In simple terms, the difference between the standards is that ISO 10002:2014 focuses on customer satisfaction, whilst AS/NZS 10002:2014 focuses on the complaints handling process.

In ISO 10002:2014, customer satisfaction is key

ISO 10002:2014 focuses on how an organisation handles the complaints it receives about its products and services. This is in line with the predecessor to this standard, AS/ISO 10002:2006. The intention of ISO 10002:2014 is to ‘benefit an organisation and its customers, complainants and other interested parties’. The standard begins with the introductory statement that the implementation of the process described in the standards can:
  • ‘enhance the ability of the organisation to resolve complaints in a consistent, systematic, and responsive manner, to the satisfaction of the complainant and the organisation; and
  • help an organisation create a customer-focused approach to resolving complaints, and encourage personnel to improve their skills in working with customers’ (our emphasis).

Throughout the standards, references are made to ‘enhancing customer satisfaction’ and creating a ‘customer-focused environment’.

Tellingly, the references to ‘customer satisfaction’ and ‘customer-focused’ approach are absent from AS/NZS 10002:2014. Although the headings and structure of the two standards appear to be the same, AS/NZS 10002:2014 in fact treads a different path.

In AS/NZS 10002:2014, process is key

The focus of AS/NZS 10002:2014 on the quality of a complaint management system, as opposed to the satisfaction of the complainant, is a significant change in the approach to complaints handling. ‘Customer’ is no longer a defined term in the new standard – the less personal ‘complainant’ is instead the preferred term.

AS/NZS 10002:2014 provides greater guidance to an organisation on how to make their complaint management system accessible, efficient and effective.

Other differences from ISO 10002:2014 include:

  • more detailed guiding principles, such as:
    • ensuring no detriment to the complainant;
    • equity;
    • communication; and
    • prevention of ongoing disputes;
  • greater emphasis on the organisation’s management being actively responsible for ensuring good complaints handling and greater details of the role and responsibilities of staff managing complaints;
  • new points in the complaints review process, including ensuring that and organisations communication, public relations and media activities are informed by its complaint management policy, processes and outcomes;
  • greater emphasis on the management of complaints (rather than handling) including:
    • the new definition of ‘a complaints management system’ as one that ‘encompasses all aspects of policies, procedures, practices, staff, hardware and software used by an organisation for the management of a complaint’; and
    • new elements to the operation of the complaint management system such as providing support in the making of a complaint, early resolution, addressing the complaint and monitoring implementation of recommendations/remedies.

In comparison to the 8 annexures included in AS 10002:2006 and ISO 10002:2014, there are now 15 annexures in AS/NZS 10002:2014 (including 4 revised annexures and 10 new annexures). Some of the new annexures are:

  • guidance on accessibility;
  • unreasonable conduct by complainants;
  • dispute prevention and management; and
  • a three level model of complaint handling.

So the result is that, AS/NZS 10002:2014 is quite a different document to ISO 10002:2014.

AS/NZS 10002:2014 – the influence of public sector agencies

Despite AS/NZS 10002:2014 stating that ‘this Standard is intended to provide guidance to organisations of all sizes and in all sectors’, its philosophy appears to be directed more towards agencies in the public sector than private organisations. Notably the new Australia standard appears to have been developed primarily by representatives from government agencies including:

  • Australian Communications Consumer Action Network;
  • Australian Competition and Consumer Commission;
  • Australian Taxation Office;
  • Consumers Federation of Australia;
  • Electricity and Gas Complaints Commissioner;
  • Financial Ombudsman Service;
  • Monash University;
  • NSW Ombudsman;
  • Public Transport Ombudsman, Victoria; and
  • Society of Consumer Affairs Professionals.

The focus on adhering to a more detailed complaints management system, rather than achieving customer satisfaction, may reflect the lack of flexibility public organisations have to achieve client satisfaction. Many public sector agencies are bound by prescriptive rule-based decision making, and therefore may not in all cases be able to achieve customer satisfaction. This is in comparison to private sector counterparts who, in accordance with their own policies, can offer solutions and even compensation to address a customer complaint and try and achieve their satisfaction and, ultimately, retain their business.

The emphasis in AS/NZS 10002:2014 on effective management of complaints starts from the premise that an organisation may not be able to ‘fix’ the cause of the complaint. It recognises that a complaint can be resolved by assuring a complainant that their complaint was dealt with properly, in accordance with a stipulated process.

These complaints handling procedures, which focus on procedural fairness and objective decision making, can also be a part of a public sector organisation’s legal obligations.

So, which standard should you follow? ISO 10002:2014 or AS/NZS 10002:2014?

There is no simple, definitive answer to this question – each organisation will need to look at its needs (and legal obligations), and examine its structure and objectives, to make a decision about which standard should be followed. Generally however, if your organisation has an international scope, ISO 10002:2014 may help to achieve consistency across your organisation, whilst meeting many of the requirements under AS 10002:2014.

Clearly, the client focused objectives of ISO 10002:2014 and the process-driven objectives of AS/NZS 10002:2014 mean that they are not directly compatible.

Although adopting AS/NZS 10002:2014 and attempting to combine elements of ISO 10002:2014 may be an option, consideration should be given to potentially conflicting objectives of the individual standards.

The benefits and disadvantages of either approach will need to be considered and evaluated. External advice may also prove useful.

 

Where to from here?

Although the new complaints handling standards have been released and adopted by the various standards agencies, businesses with complaints handling obligations should not let this cause them alarm.

The requirement to have complaints handling policies – which arise, for example, under financial services law, have not been updated.

For example, ASIC RG165 Licensing: Internal and external dispute resolution and the Corporations Regulations 2001 (Cth) (regs 7.6.01(1) and 7.9.77(1)) still references the old AS/ISO 10002:2006. The decision that policymakers make with respect to adopting either ISO 10002:2014 or AS/NZS 10002:2014 will provide guidance to organisations about which standards they should adopt. The ACCC, in their guidelines for debt collectors, also references AS/ISO 10002:2006. 

If you have followed AS/ISO 10002:2006 in the past and are wondering whether to update your existing complaints handling policies and procedures maybe the most sensible approach is to sit back and ‘wait for a little water to go under the bridge’. Then take time to review the various commentaries that are likely to be published by industry regulators and subject matter specialists before making a decision.

If you don’t have a complaints handling system in place we recommend that you read our previous blogs on complaints handling and take steps to put a system into place as soon as possible, as you are missing one of the most critical weapons available in an organisation’s governance arsenal.