Banks will soon be required to settle customer complaints within 30 days under new guidelines, as the sector braces for the end of stimulus packages in September.
ASIC on Thursday presented new internal dispute standards that apply to banks and superannuation funds and are designed to streamline and improve fairness in the complaints process.
Under those rules, banks would only have 30 days to settle internal customer disputes (down from 45 days), while the deadline for super fund trustees to respond has been slashed in half to 45 days.
However, those changes could be enacted as late as October 2021, after the regulator extended the compliance date because of the pandemic.
ASIC deputy chair Karen Chester said the standards would help improve customer outcomes at a time when “complaints handling is more important than ever”.
“Most financial firms, like us, want to see positive complaint management cultures that welcome complaints and focus on fairness, quality and timeliness in how they are handled,” Ms Chester said.
“Making it right when consumers have suffered loss is an important way to stimulate ongoing consumer participation and trust in the financial system.”
The new rules also require banks to provide customers with detailed explanations if a dispute outcome is not in their favour, and to notify customers about how to access external support.
New rules follow years of investigations
According to the Australian Financial Review, the crackdown on disputes follows a six-week investigation in which ASIC agents found that complaint-handling processes suffered from systemic “deficiencies” and “delays”.
NAB, ANZ, Commonwealth Bank, Westpac and AMP were among the providers scrutinised.
It also follows separate ASIC consumer research undertaken in 2018 that found 3.2 million Australians planned to register a complaint with their financial services provider in the preceding 12 months.
But less than half – 1.5 million customers – actually made a complaint.
More customers lodged complaints in pandemic
Through the pandemic, the Australian Financial Complaints Authority – the financial services ombudsman – has fielded 36,409 customer complaints.
Among those, 6112 were directly related to the pandemic – including customers’ concerns around banking hardship programs.
That compares to 29,896 requests from consumers and small business owners between March and July last year.
AFCA CEO and chief ombudsman David Locke welcomed ASIC’s move and said improved internal disputes would ease the load on banks and provide customers with greater transparency.
“The updated guide will not only improve the quality of internal complaint resolution but will enable financial firms to deliver better outcomes for consumers, and reduce the need to escalate complaints to external dispute resolution,” Mr Locke said.
Consumer groups also welcomed ASIC’s decision.
Consumer Action Law Centre CEO Gerard Brody told The New Daily customers often lodged complaints about the complaints processes, with many feeling their concerns had not been handled properly.
Mr Brody said the changes are particularly pertinent as customers on loan deferrals and other hardship assistance are likely to struggle to restart repayments once measures are wound back.
“Banks and lenders need to realise that the current crisis is not business as usual,” Mr Brody said.
“Anyone who is concerned about their institution’s hardship measures, including loan payment holidays, are entitled to make a complaint [and] given the financial stress people can be under, it’s important that institutions respond to complaints quickly.
“Lenders need to recognise that many people won’t be able to return to full repayments after any stimulus or assistance is wound back – they need to be sticking with their customer for the long haul and offering ongoing assistance.”
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