In a statement on Friday, the regulator outlined the findings of a targeted review of compliance with Regulatory Guide 271 Internal dispute resolution (RG 271). The initial review involved 35 trustees and was followed by a more detailed review involving a subset of 10 trustees.
RG 271 typically sets a maximum timeframe of 45 days to issue a written response for complaints about superannuation that are not an objection to the distribution of a death benefit.
While ASIC did not disclose how many funds weren’t meeting regulatory guidelines, a day earlier Financial Services Minister Stephen Jones said that as many as 20 per cent of super funds failed to consistently respond to complaints within the mandatory 45 day timelines.
“And it is almost a 50/50 proposition whether funds will let complainants even know that delays are occurring,” Mr Jones said.
Moreover, he disclosed that 80 per cent of funds were deemed by ASIC to have poor management of systemic issues that may affect consumers.
“The government and the regulators will take steps to lift the standards. And in a competitive marketplace, it is on the funds to be better.”
Trustees fall short
In its statement on Friday, the regulator confirmed that its review found a number of trustees did not respond to a significant portion of their complaints in a timely manner.
Commenting on the review’s findings, ASIC commissioner Danielle Press stressed the seriousness of this offence.
“We saw examples of trustees’ failure to comply with fundamental obligations, which could lead to poor outcomes, such as consumers abandoning a complaint rather than seeing it through,” she said.
“While a few trustees did the right thing, in many cases there were serious deficiencies in trustees’ dispute resolution processes and how they monitored and responded to complaints.”
Moreover, ASIC found that most trustees failed to ensure all complainants were kept informed when their response to the complaints exceeded the maximum timeframe.
Additionally, the regulator said that too many written responses to complaints omitted mandatory content related to a consumer’s right to take their complaint to AFCA.
The review also found that there were gaps in how most trustees managed systemic issues that could be identified through member complaints or how trustees used intelligence from complaints to improve their products and services.
“We consider this a missed opportunity for trustees to detect and address issues that impact their wider membership, thereby improving their business and minimising future problems,” ASIC said.
Furthermore, the regulator said that the internal reporting of trustees “often lacked sufficient detail to identify, much less remedy, deficiencies in complaint handling”.
ASIC revealed that it would be writing directly to trustees about issues specific to their compliance with RG 271.
“The trustees will be required to take prompt action to remedy the issues identified and the majority will need to report to ASIC on improvements made. ASIC is also considering other regulatory action where more serious concerns were identified,” it said.
Ms Press added that having robust-end-to-end dispute resolution arrangements designed with members’ interests in mind is a “must have”.
“I strongly encourage all superannuation trustees to critically examine their dispute resolution arrangements based on our findings, make timely improvements and ensure they are fit-for-purpose going forward,” she said.
“ASIC will continue to closely monitor trustee compliance with RG 271. Where we identify serious compliance failures impacting consumers, we will take regulatory action, including enforcement action where appropriate, to address harm.”
