The Insurance Brokers Code Compliance Committee (IBCCC) draws to the attention of all insurance brokers, the Australian Securities and Investments Commission’s (ASIC) updated guidance on Internal Dispute Resolution (IDR).
This is a welcome addition to striving for better complaint handling practice.
Complaint-handling obligations are outlined under Service Standard 10 of the Code and have been a particular focus of the IBCCC which has been urging Code subscribers to improve their performance in this area for some time. The IBCCC 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 obligations, but good industry practice and consistent with caring for your clients.
ASIC’s Regulatory Guide RG 271 Internal Dispute Resolution (RG 271) was released on 30 July 2020 and sets new standards and requirements for complaints-handling across the financial services sector. They will take effect on 5 October 2021. All firms providing financial services are required by ASIC to have an IDR process in place and to comply with its procedures.
The biggest changes for the insurance broking 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.
- Firms will be expected to acknowledge the complaint within 24 hours (or one business day) of receiving it, or as soon as practicable.
The Code currently allows for standard complaints to be resolved within 42 days:
- 21 to advise how the broker proposes to resolve the complaint, plus
- 21 to resolve a dispute, (i.e. an unresolved complaint).
The Code will need to be amended to reflect the new ASIC 30-day requirement.
The Australian Financial Complaints Authority’s (AFCA) current timeframe to work directly with the complainant to reach a resolution is up to 45 days for standard matters (other timeframes specify up to 30 days for financial difficulty and up to 90 days for superannuation or traditional trustees matters).
When a matter is referred to AFCA after IDR has been completed, a broker has 30 days to work directly with the complainant to reach a resolution. For further information see https://www.afca.org.au/what-to-expect/the-process-we-follow.
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.
- a firm does not need to provide an IDR response to a complainant if a complaint is resolved within five business days to the complainant’s satisfaction. However, the IBCCC encourages Code subscribers to respond in five-day cases as a matter of good practice, believing a consistent response to complaint-handling helps to reinforce its process.
The IBCCC welcomes the ASIC timeframes and believes subscribers will have sufficient time to review systems and implement changes to meet the new standards.
IDR timeframes were the subject of the IBCCC’s most recent inquiry and the resulting report (‘Improving Complaints Handling Timeframes’) canvasses many of ASIC’s points and offers a series of relevant recommendations.
Effective IDR helps to builds trust between Code subscribers and clients 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. ASIC’s report reflects many of the IBCCC’s areas of interest.
The IBCCC has shared some of ASIC’s points with Code subscribers in the hope that it will spark discussion about working beyond minimum regulatory requirement and in the direction of attitudinal change.
- ASIC expects 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”. Brokers 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. The IBCCC notes that this would include any potential Code breaches.
- ASIC expects that its standards can be adapted to suit the nature, scale and complexity of any business; that Boards, chief executives and senior management should be actively interested in and support effective complaint management; that a firm’s culture should recognise that everyone has a right to complain, be open to receiving complaints and demonstrate a commitment to resolving complaints through action; and to actually encourage complaints.
As well as written resources and recommendations that will help you meet the ASIC requirements in time, the IBCCC is always available to advise and assist if required. RG 271 can be viewed at: https://asic.gov.au/regulatory-resources/find-a-document/regulatory-guides/rg-271-internal-dispute-resolution/ .