A Nightmare On Compliance Street


When I first read ASIC’s new Regulatory Guidance (RG 271) on how Financial Services (FS) firms must prepare to run their Internal Dispute Resolution (IDR) processes, the 1980’s cult horror classic sprung to mind and inspired this blog title. (1)

Not because ASIC represents Freddy Krueger, the vengeful ghost character powered by his victim’s fear, kills them in their dreams with a bladed glove. No, they’re not the bogeyman here. The metaphor is, don’t fall asleep, or things could become messy.

In this case, the blades will be the enforceable paragraphs that freely pepper (better still, splatter) this RG, along with an abundance of more stringent standards. Best practice has been dialled up quite a few notches.

Issued on 31 July 2020, RG comes into effect on 5 October this year. The decent transition period hints at what lies ahead.

“Firms will need to undertake internal capacity building…” (.25)

Small firms will have to comply without the resources of the big guys. As I write this, it’s almost March, so the day when the force of law and possible civil penalties (yikes!) comes into effect looms large.

Interestingly, complaints and disputes are used interchangeably throughout. Bear in mind; complaints are different because of the inequality between parties. A complaints officer handling many cases is not as emotionally invested in resolution as the customer. I’ll return to this soon. Don’t fall asleep.

In drawing up RG 271, ASIC has done the poker equivalent of raising the stakes. The pressure is now on the other players – the FS Firms affected by it – to respond. (2)

Let’s begin with what’s happened to the definition of a complaint. It’s now an “expression of dissatisfaction”. Pretty broad, right?

It then goes on to say that a response could be implicitly expected. (3) In other words, the complaint doesn’t have to be in writing to trigger a firm’s obligation to deal with a matter according to the new requirements. Firms must take a proactive approach to identify complaints.

This enabling piece bears out in the new standard, quote:

“Firms should encourage complaints and make it easy for people to voice their concerns by developing an IDR system that is readily accessible and easy to use” (.131)

Then there’s the requirement for the process to be unbiased:

“Financial firms should manage complaints objectively and without actual or perceived bias” (.167)

Oh, and the process must be free of charge to the complainant even though it’s kind of open season. (4)

Hmmm, I was unhappy with the teller’s slow response who served me the other day, and I left the branch frowning.

This kind of interaction will almost guarantee an increase in the number of complaints and the accompanying resources to manage. ASIC guessed this might be the case, and they’ve addressed this with more blades (aka enforceable paragraphs):

“The IDR process must be resourced so that it operates fairly, effectively and efficiently” (.142)

“…includes resourcing the IDR function to deal with intermittent spikes in complaint volumes” (.143)

So, they’re anticipating more biff, but FS Firms must carry the can. Not only that, but the onus is also on them to track the melee with an enforceable requirement to record:

“Firms must have an effective system for recording information about complaints. The system must enable firms to keep track of the progress of each complaint” (.179)

It seems to be about trying to strike a balance between ASIC’s desire for a more consumer-centric approach and a firm’s capacity to deal with what may seem to be minor grievances – at the source.

ASIC has also elevated responsibility for a firm’s adherence and oversight to the highest levels, the CEO (or equivalent) and Board (.128 and .143).

As well as recording, there’s the reporting, another blade:

“Firms must provide reports about complaints data regularly to senior management and the firm’s board (or equivalent)” (.183)

How do you enable complaints and, with an abundance of caution, proactively read a customer’s mind that a response may be implicitly required in a very timely way?

“Timeliness is central to effective complaint management and is a key performance measure of a firm’s IDR process” (.49)

“…must provide an IDR response to a complainant no later than 30 calendar days after receiving the complaint” (.56 – enforceable)

What if a firm could simply refer their customers to a portal (URL) so they could conveniently engage under their own steam and allow the firm to deal with any volume via a single location efficiently?

Now comes the good news. Outsourcing to external providers is permitted, especially if it ensures accessibility (.47), and leveraging the power of technology and data analytics is a best practice standard (.17(g)).

We at Guided Resolution are all over this RG like Freddy’s bad fitting suit.

As I touched on earlier, complaints require a different pathway than disputes, and we’ve worked with the leading Industry Ombudsman to configure our automated system to handle them. In the IDR world, we’re a one-stop-shop.

Our capabilities – self-guided, self-paced, available 24/7, easy to use and unassuming – deliver the following benefits:

  • Safe and secure
    • Reduce handling time
    • Management reports
    • No lock-in contracts
    • Cost savings
    • Compliant
    • Includes self-serve guided mediation tool

We take the pain out of compliance. Our fit for purpose platform is a ‘must have’ to establish immediate internal capacity and underwrite best practice.

Nancy, the heroine in the horror film, defeats Freddy by pulling him from the dream world and stripping him of his powers when she stops being afraid of him.

With the launch of Guided Resolution’s new complaints platform, there’s no need to
be afraid of RG 271.

(1) For younger readers, the film is “A Nightmare on Elm Street” (1984).

(2) These include all AFSL holders with retail customers, unlicensed issuers of a financial product (retail), all credit providers, lessors and their service providers (brokers) and all FinTech companies.

(3) RG 271.27 – an expression of dissatisfaction concerning products, services, staff, or handling of complaints.

(4) 4 RG 271.141