Advice firms on notice with new complaints handling standards

The corporate regulator will be focusing heavily on the internal dispute resolution systems of financial advice firms in making sure they meet its standards.

ASIC proposed new standards about how financial firms handle consumer and small business complaints, including new mandatory data reporting to make firms’ complaints-handling performance transparent.

Financial firms will be required by ASIC to meet the new standards when they deal with consumer complaints through their Internal Dispute Resolution (IDR) arrangements.

IDR is the first step in the complaints-handling process – an opportunity for the financial firm to investigate, resolve or redress a problem before a consumer or small business can escalate their complaint to the Australian Financial Complaints Authority (AFCA). 


All financial firms (including banks, insurers, credit providers, advisors and most superannuation funds) are required by legislation to have an IDR system that meets ASIC’s standards.

“It is widely acknowledged there is room for much improvement when it comes to handling consumer complaints in our financial system. The Ramsay Panel Review, recent ASIC research, case studies before the Financial Services Royal Commission (FSRC) and our own supervisory work have all identified shortcomings in consumer complaints handling,” said ASIC deputy chair Karen Chester.

“Consumers expect and need a fair, timely and effective way to have their complaints dealt with, and to be provided redress where appropriate. The absence of such effective redress, and the failure of firms to identify and look into systemic complaints, were key findings of the FSRC and the Prudential Inquiry into the CBA.

“With the benefit of broad consultation, ASIC’s new standards will lift complaints handling performance of firms and ultimately consumer outcomes and fairness of the financial system. And transparently so. These standards will also apply in their entirety to all APRA regulated superannuation funds.”

The proposed new standards have been informed by recent consumer research by ASIC and findings from aspects of ASIC’s new onsite supervisory program – Close and Continuous Monitoring which is currently reviewing IDR policies, practices and procedures in Australia’s five largest and most complex financial services institutions.

The proposed new standards and data reporting requirements will continue to forge the effective relationship between IDR and the work of AFCA, the independent external complaints scheme.

“Firm performance in how they handle customer complaints, and their interaction with AFCA, will increasingly be in plain sight. This greater transparency will inform consumer and broader public understanding of how well firms treat their customers,” Ms Chester said.

“For a regulator, it also provides an invaluable insight into how non-financial risks are being managed by the firm and ultimately the board. ASIC expects greater investment and attention by boards to their own internal customer complaints data and complaints handling performance.”

Some key elements of the new standards that ASIC is seeking feedback on include:

  • reducing maximum time frames for IDR responses;
  • what constitutes a complaint, including if received by way of a firm’s social media;
  • setting clear standards about what should be in written reasons for decisions;
  • strengthening the requirement that firms take a systemic focus to complaints handling; and
  • the details of the new framework for recurrent complaints data reporting to ASIC.

The Australian Financial Complaints Authority welcomed ASIC’s announcement, with chief ombudsman and chief executive David Locke saying “increased transparency is good news”.

“It will help firms to continuously improve, and that will be good for the firms and their customers alike,” Mr Locke said.

“We also welcome the idea of requiring firms to provide a standard set of data – this will help companies know how they compare to their competitors and help to inform consumers about the companies they’re dealing with.

“In this digital age, the move by ASIC to require firms to include complaints made on social media platforms, is entirely appropriate.”

Noting that ASIC is consulting with industry about the proposed changes, Mr Locke observed the timeliness of the process and the proposed regulatory changes.

“ASIC’s aim to match dispute resolution data with AFCA data will provide a robust and accountable way to make sure the system is fully transparent,” he said.

Advice firms on notice with new complaints handling standards
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Adrian Flores

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].

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