A Revolution in the Internal Dispute Resolution Procedures: What You Need to Know

After a rigorous review performed by the Australian Securities and Investments Commission (ASIC) last year, complaint handling processes are about to change in the finance industry. ASIC is the consumer credit regulator of financial services in the country. On top of that, the agency provides guidance in handling the changes in RG165, which is now replaced by RG 271: Internal Dispute Resolution.

But before we start talking about RG 271, it’s essential to learn what exactly is a complaint. ASIC’s basis for the definition is from the AS/NZS 10002:2014. The standard describes a complaint as dissatisfaction expressed towards an organisation regarding products, services, or staff. Complaints may also be regarding how the complaint itself was handled. By law, a resolution is required legally, whether explicitly or implicitly.

A Big Change for All Credit Licence Holders

The new internal dispute handling framework will take effect on 5 October 2021. However, before implementation, it is necessary for Credit Licence and Australian Financial Services Licence (AFSL) holders to understand and comply with these changes. So, even if it is still a few months away, all licence holders should start their preparations as soon as possible.

ASIC issued ASIC Corporations, Credit and Superannuation (Internal Dispute Resolution) Instrument 2020/98. This published document includes all the updated requirements that involve financial firms, particularly in dealing with complaints made by customers and other businesses. One of the significant changes evolves around reducing timeframes for providing responses to disputes.

The agency also published Regulatory Guide RG 271, which focuses on internal dispute resolution for Australian financial service licensees and financial firms. The updated Guide works with the ASIC’s IDR requirements in line with the statutory regime as explained by the Treasury laws Amendment. This amendment is centred on putting customers first.

The mentioned Instrument, along with the RG 271, is part of the agency’s attempt to enhance response and action towards consumer complaints in the financial services industry. The changes in the current procedure guide firms not only in handling complaints but also in ensuring the performance of required actions is transparent.

The main focus of the changes is in the fairness and timeliness of providing resolutions for complaints while removing the possible occurrence of systemic issues.

Here are some of the most critical points in the new RG 271 Guide:

  • There should be a reduced timeframe when responding to complaints.
  • The new RG 271 also sets new requirements for time constraints when working with customer advocate reviews of appeals against the decisions of the dispute resolution.
  • The Guide also sets out the type of information that your business should include when creating IDR responses. By following the guidance, consumers can decide whether they should escalate their grievance or settle.
  • Senior managers should become more involved in the internal dispute handling procedures. It is part of their job to monitor the complaint and gain a complete understanding regarding the mistake or ongoing conflict.
  • RG 271 provides guidance on what to do if a firm’s representative is not acting according to the consumer’s best interests.
  • Another change revolves around the expected dispute resolution process where it should apply to both the consumer complaints as well as the complaints of small businesses with less than 100 employees.
  • The requirements issued to Australian Credit Licence holders may not be viewed as life-changing. However, ACLs will soon have to incorporate internal procedures in handling and resolving complaints while also publishing external policies.

It should be noted that there are considerations to make before updating policies and processes in order to comply. For instance, does a particular business currently have implemented the required turnaround times?

internal resolutions for disputes

What Are Your Next Steps?

You may already know that you cannot outsource internal dispute resolution (IDR) processes. However, compliance is still required to the IDR and is in the firm’s hands with which the complaint was issued.

Suppose you are an Australian Credit Licensee. In that case, you should start your preparations for the new internal dispute resolution procedures today. So, initially, you need to review your current IDR procedures, which may involve amending. That way, complaints can promptly be referred to and addressed by managers. Of course, it will depend on the services you provide and what your business entails.

You should already have completed the following actions come 5 October 2021:

  • Your Dispute Resolution policy should align with the timings and details stated within the internal dispute resolution responses to complainants, as explained in the RG271 Guide.
  • Your Complaint Handling policy has already been reviewed. A copy of it is published and easily accessible by your future clients, particularly online through your website. 
  • Your staff and management team all know about the new policies and procedures.
  • Managers are expected to stay informed. If they hold an AFSL, it means these managers are a “financial firm.” Therefore, you may have to amend the way they handle complaints.
  • With everyone understanding the changes in IDR, it’s vital that all teams within the business work collaboratively. It becomes easier to implement essential changes in order for the company to comply with the law.

All changes to your IDR complaints processes should be widely publicised. You may have to update them to meet compliance plans, online policies, and Product Disclosure Statements, among others. It’s required that the IDR process is free, easily understood, and allows access to groups of people, including people with a different language or disability.

SalesKey emphasises the importance of continuously reviewing your company’s IDR communications’ effectiveness. Should you need help with your internal dispute resolution procedures or have any questions regarding RG 271 compliance, contact SalesKey today, our expert team can help.