This article was printed in the Australian Financial Review in August 2023

With ASIC threatening multimillion-dollar fines as it cracks down on complaints handling, Australia’s financial services industry can’t afford to risk noncompliance with new RG 271 Internal Dispute Resolution regulations.

In light of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, regulators overhauled Australia’s complaints-handling rules with an expectation that consumers and small businesses will have ‘‘access to fair, timely and effective dispute resolution’’.

ASIC has stated that it expects financial firms to take a proactive approach to identifying complaints. Unlike previous regulations, RG 271 contains enforceable paragraphs identifying under which sections ASIC can pursue civil action to ensure financial firms comply – with maximum penalties exceeding $11 million.

Key regulatory changes include reduced timeframes for responding to complaints – including superannuation complaints – and new timeframe requirements for customer advocate reviews of appeals against internal dispute resolution (IDR) decisions.

RG 271 also sets out what information firms must include in written IDR responses, to allow consumers to decide whether to escalate their complaint, as well as giving guidance as to how companies can deal with representatives who are not acting in consumers’ best interests.

Meanwhile, the definition of a ‘‘complaint’’ has been expanded to ensure that financial firms apply their IDR processes to all expressions of dissatisfaction made by a consumer or small business. Financial firms are required to have an effective system for recording complaints and tracking their progress, with an obligation to provide regular reports to senior management and the board.

For the first time, ASIC is also enforcing mandatory complaints reporting to the regulator, every six months. Initially, this only applied to Australia’s largest financial players, but the obligation has extended across the industry.

With these new reporting regulations now applying to the final tranche of Australian financial firms, many firms must now submit their IDR reports to ASIC for the first time – for the period July 1 to December 31, 2023, with lodgement by February 29, 2024.

RG 271’s IDR reporting obligations include more than 120 complex business rules, creating a significant challenge for Australian financial firms of all sizes, says Paul Evans, chief executive and founder of Australian complaints, quality and compliance platform provider Causia.

‘‘The scrutiny of ASIC’s reporting criteria seems to be misleading some financial firms into thinking that RG 271 is a reporting issue alone,’’ Evans says.

‘‘The whole point of RG 271 is to force Australian financial firms to actually overhaul their complaints handling processes – improvements which need to be reflected in the detail of these new mandatory ASIC reports.’’

Causia’s solution, Complaints Pro, ensures that financial firms are RG 271 and ISO 10002:2023 compliant from day one, offering a uniform system with clear and simple self-guided workflows that ensure processes are fully compliant and fail-safe.

Becoming fully compliant isn’t as simple as capturing a few extra fields in an existing complaints management solution; it requires a redesigned complaints management system which enforces compliance from behind the scenes, Evans says.

‘‘Complaints Pro prevents you from making mistakes and being non-compliant,’’ he says, ‘‘but compliance today, doesn’t guarantee compliance tomorrow. RG 271 and the IDR Data reporting handbook have been updated twice since October 2021.’’

The key to satisfying the new regulatory obligations is a complaints handling solution which is designed from the ground up to not only enforce RG 271 complaince, but to remain current as the regulation adapts and changes over time.

‘‘At this point, you can have full confidence that your compliance is in order, and you simply press one button to generate those complex reports for ASIC – there’s no fudging the numbers with the risk of non-compliance being exposed in an audit,’’ Evans says.

The ability to validate upfront that complaint-handling processes are completely RG 271 compliant and that staff are abiding by them, rather than simply attempting to prove it to the regulator after the fact, offers financial firms crucial risk mitigation, and provides assurance to those concerned about RG 271 compliance.

‘‘It’s not just the risk of significant fines, it’s also about the risk of considerable reputational damage should an Australian financial firm be hauled over the coals for not treating their customers with respect,’’ Evans says.

‘‘The royal commission really shone a spotlight on some shoddy industry practices and ASIC has come down hard, so no financial firm can afford to make the headlines because it failed to heed those warnings and take customer complaints seriously.’’

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