New Complaints on the Block
Since AFCA was created to handle consumer complaints about financial services, it’s been anticipated there would be updates to complaints handling regulations for firms. The Australian financial services market must adapt to the increasing pressures from consumer expectations and complaints handling is a key area for ASIC to inspire renewed faith in the market. They had to act.
With that in mind, in December there are changes to Regulatory Guide 165 – Internal and External Dispute Resolution with a host of proposed updates that will affect Financial Services firms from AFS Licensees to Superannuation Trustees.
So what are the proposed change to the complaints rules?
If you haven’t had a chance to flip through the draft Reg Guide, the key changes proposed are:
- Reduced timeframes to respond to complaints before EDR
- Increased record keeping requirements
- Increased reporting obligations
- A new definition of ‘complaint’ that incorporates complaints made on social media
- Further guidance on what firms need to be doing around systemic issues
- Elevating the expectations on senior management in reviewing and being aware of complaints information and outcomes.
How will these changes impact me?
These changes will have significant impact on firms already dealing with a host of regulatory changes following the Royal Commission. However, following industry feedback, concerns were raised around the operating cost of the new data requirements. It is now looking like ASIC could refine the recording and reporting elements of the new Reg Guide, or will look to further consult. Either way firms will have a transition timeframe to implement the changes.
Are these changes just more work?
These changes are a great opportunity for firms to begin recognising the unique value of complaints and the feedback they provide. Rather than seeing these changes as further regulatory burden, firms should be leaning in to complaints as a key source of feedback on their products, their services and their marketing transparency. Firms should make sure that they’re prepared for changes and have the tools and resources in place to capitalise on them.
Complaints data, when used properly, can help firms to resolve systemic issues before they become wide scale, enables them to accurately market and price their products, and delivers insight around wasteful or unhelpful practices or products. It’s a direct line into the psyche of their clients.
More than this, as consumer expectations change and grow, whilst trust in financial services is being eroded by a steady stream of market scandals and failings, a quick, efficient and empathetic complaints approach can help a firm to distinguish themselves to clients, old and new.
A firm that takes a proactive approach to ensuring a consumer is treated well, with respect and transparency can begin to rebuild trust and promote to consumers that they’re willing to listen and to change.
With the updated Reg Guide due this month, we all need to be prepared.