ASIC’s recently released its 2021-2022 Annual Report (Annual Report) which reveals that in 2021–2022, the Australian Financial Complaints Authority (AFCA) received 72,358 complaints and secured $207.73 million in compensation for consumers and small businesses, an increase of 3 per cent on the previous year. AFCA deals with financial services, credit and superannuation complaints that consumers, small businesses and primary producers have made to an Australian financial services licensee (AFSL) that has not been resolved during internal dispute resolution (IDR).
During 2021 and 2022 ASIC, which has oversight of AFCA, has released several critical regulatory guides and other materials relating to complaints management including:
RG 271 defines a ‘complaint’ as “an expression of dissatisfaction made to or about an organisation—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.” Given the breadth of this definition, an AFSL to whom RG 271 applies must understand how to identify a ‘complaint’ and, as this article will discuss, how to record various information about the complaint.
RG 271 applies to AFSLs that provide financial services to retail clients. If an AFSL wants to avoid a complaint from a consumer against it being referred to AFCA (and consequently becoming a statistic in the next ASIC Annual Report!) it should ensure that its dispute resolution system complies with the standards and requirements made or approved by ASIC, in particular, those set out in RG 271, which took effect on 5 October 2021. The relevant AFSLs have now had over a year to administer and manage their complaints system and meet their IDR requirements under the framework prescribed by RG 271. The AFSLs have also had that time to ensure that their internal systems are effectively collecting and recording information about complaints. RG 271 sets out a list of types of complaint data to be collected and also prescribes that AFSLs must provide reports about complaints data regularly to senior management and the firm’s board (or equivalent).
If an AFSL has not been properly recording and internally reporting such information over the last twelve months, it will likely struggle to meet the new external IDR data reporting requirements under the ASIC Corporations (Internal Dispute Resolution Data Reporting) Instrument 2022/205 (IDR Instrument), which take effect in two stages in 2023:
Section 5 of the IDR Instrument sets out when an AFSL must give the IDR information to ASIC. In summary, an AFSL must make a report to ASIC twice a year. The data must cover the following reporting periods:
The first reporting period runs from 1 July to 31 December 2022 for the firms included in Stage One. For the firms in Stage Two, the first reporting period will run from 1 January to 30 June 2023.
Using the reporting dates, an AFSL can work backwards and start to prepare for the reporting process by ensuring that their complaints management systems accurately capture and record the IDR information ASIC expects to see.
The AFSL must give ASIC the IDR information through ASIC’s Regulatory Portal. It is important that the IDR information is presented and formatted in accordance with ASIC’s requirements, which are specified in Appendices 1 and 2 in the IDR Handbook. The data glossary, also in the IDR Handbook, must also be used. To assist AFSLs, ASIC provides example reporting templates.
CompliSpace is a leading provider of governance, risk and compliance services to AFSL holders. We provide flexible RegTech solutions to business from domestic and global fund managers through to responsible entities, ASX listed entities, financial planners and insurance companies, helping to streamline and simplify their compliance obligations and data management for increased oversight and empowered decision making.
To help our clients comply with their IDR reporting requirements, CompliSpace is creating an ‘IDR Reporting Template’ through our Assurance Product, which builds on the information and functionality of their existing complaints management register. The data from the template can be used to report the required IDR information to ASIC through the ASIC Regulatory Portal. If you’d like to discuss how we can help your organisation comply with the new IDR reporting requirements, please get in touch with us by email at contactus@complispace.com.au or through our contact page.