The surveillance conducted by ASIC examined trustees’ compliance with the new enforceable requirements in Regulatory Guide 271 Internal dispute resolution, which took effect on 5 October.
For the first stage of the surveillance, ASIC gathered and analysed data on the status and timeliness of complaints handling, excluding objections to death benefit distributions, from a selection of 35 trustees of 38 funds covering 49,029 complaints received between 5 October 2021 and 28 February 2022.
One of the requirements under RG 271 is that trustees must notify complainants of delays and their right to go to AFCA when a written response to a complaint is not sent within 45 days.
However, ASIC’s review found that in such circumstances, complainants were not notified nearly 50 per cent of the time.
ASIC also reported that one in three trustees had advised the regulator that there were varying degrees of process failures in their IDR systems.
“These included identifying or capturing complaints correctly, omitting mandatory content from IDR response letters or failing to send out IDR responses for some complaints.
In the next stage of the surveillance, ASIC said it will check how relevant trustees among those reviewed are addressing the concerns identified so far and closely examine a smaller sub-set of trustees.
“ASIC will also consider regulatory action where appropriate, and intends to communicate the outcomes once the surveillance is complete,” the regulator said.
ASIC commissioner Danielle Press said dispute resolution is an essential part of the consumer protection framework in Australia.
“A trustee’s approach to dispute resolution is a meaningful measure of whether they are focused on the interests of their members. It also indicates the maturity of the trustee’s approach to risk,” said Ms Press.
“When done well, dispute resolution can benefit trustees by helping build members’ trust and confidence.”
Ms Press said the first stage of ASIC’s surveillance about internal dispute resolution practices of trustees has identified some problem areas that need fixing.
“We want trustees that have fallen behind to strengthen their internal dispute resolution arrangements to make sure that member complaints are handled in an effective, fair, and timely way,” Ms Press said.
