Dispute resolution: ASIC trains its spotlight on social media
Proposed changes to ASIC's standards on internal dispute resolution could mean advisory firms will have to lift their game when it comes to monitoring their own social media platforms.
Financial advisers may soon be facing new standards for their internal dispute resolution (IDR) systems.
The changes would mean giving greater weight to customer complaints made on social media such as Twitter and Facebook.
All financial firms need an IDR system that meets ASIC’s standards, which are outlined in Regulatory Guide 165.
But on May 15, ASIC released a consultation paper that proposes updating RG165 with new standards for how financial firms handle consumer and small business complaints.
Room for improvement
The new standards follow evidence that financial firms could improve how they handle complaints.
“It is widely acknowledged there is room for much improvement when it comes to handling consumer complaints in our financial system,” ASIC Deputy Chair Karen Chester said in a media release.
An ASIC research report published on December 2018 found “consumer fatigue” and shortcomings in the complaints process.
According to the report, while 17 per cent of Australians surveyed had considered making a complaint in the past year, just 8 per cent went on to lodge one.
And 18 per cent of surveyed complainants dropped out or withdrew their complaint before it was resolved. The report also found financial firms took too long to conclude complaints.
As a result, in its consultation paper, ASIC has made 15 proposals including:
A new definition of complaint (including social media): ASIC wants to expand how it defines a complaint to include expressions of dissatisfaction made “to and about” an organisation. The existing guidelines define a complaint as relating to a product or service.
ASIC wants to clarify that the definition of complaints about a firm should include complaints made on a firm’s social media platform. “At a minimum, we expect that complaints made on a financial firm’s own social media platform(s) will be dealt with through the firm’s IDR process when the consumer is both identifiable and contactable,” ASIC says.
ASIC says the change establishes social media as a legitimate channel for making complaints, and it reflects changes in how complaints are being made.
Recording of all complaints: ASIC wants to update the process so financial firms are required to record all complaints including those resolved at first point of contact. Under existing guidelines, firms don’t have to record complaints resolved by the end of the fifth business day after the complaint was received.
Reducing maximum timeframes for IDR responses: ASIC also proposes the reduction of the maximum IDR timeframe for superannuation complaints and complaints about trustees providing traditional services from 90 days to 45 days. And it wants to reduce the maximum timeframe for all other complaints from 45 days to 30 days.
IDR data reporting and publication: ASIC wants to mandate an IDR data reporting regime. ASIC is also proposing to publish IDR data at both the aggregate and firm level. ASIC acknowledges there are diverse views about publishing the data, “particularly the publication of identifying, firm-level data”.
The consultation process
- Advisers can comment on ASIC’s proposed changes to RG165.
- Comments on the Consultation Paper are due August 9.
- As part of the consultation process, ASIC will also hold IDR stakeholder meetings from May to August.
- The revised regulatory guide and legislative instruments will be released on December 2019.