ASIC to push for rationalisation of complaint schemes

TheAustralian Securities and Investments Commission(ASIC) would like to see some rationalisation of external complaint schemes for the financial services industry.

However, it will not be looking at making any moves until after March 11 next year, the first day of the new licensing regime, says ASIC executive director of consumer protection Peter Kell.

“ASIC can’t force schemes to rationalise,” he told the inaugural Financial Industry Complaints Service (FICS) conference in Melbourne last week.

“We will be looking at the schemes that are approved after March 11, but we think there are too many.”

Currently, ASIC has approved six external complaints schemes that cover banking, financial planning, credit unions and the insurance industry.

“It is an area where ASIC needs to do some more work,” Kell says. “And it is not an area that benefits from competition.”

With the former well-defined areas of financial services becoming blurred, many organisations will fall into a number of complaint schemes. A bank owning a wealth creation division would fall into the banking, financial planning, life insurance and funds management complaint schemes.

“There isn’t an argument for just one scheme, but there are too many schemes at present,” Kell says. “I would not like to describe at present how ASIC will deal with this problem as it is a government issue. But we would like the sector to be cost-effective and to deliver high-quality outcomes.”

FICS chief executive Alison Maynard says her organisation sees co-operating with other schemes as a future priority.

“For efficiencies, FICS will co-operate with other complaints schemes,” she says. “FICS has adopted the case management system of the banking ombudsman and we are looking at more co-operation and co-ordination with other schemes.”

Membership of an ASIC-approved external complaints scheme is now mandatory for organisations that deal with retail clients. The organisation must also have an internal complaints resolution process.

Kell says the internal scheme gives the organisation the ability to deal with complaints quickly and at a reasonable cost.

“However, that doesn’t mean complaints should be buried by the internal scheme,” he says. “Consumers have the right to go to an external scheme, as both internal and external schemes are linked.”

Kell says the complaints that go to an external scheme are “just the tip of the iceberg”.

“At present, ASIC doesn’t have a clear picture of internal complaints schemes,” he says. “But we will be looking at the schemes to see what the timelines are for handling complaints and how transparent they are.”

Kell says FICS is well placed to detail some of the problems of internal schemes because it would see the procedures as part of its investigation into a complaint.

“We will also be looking to see if organisations are not telling their clients about external schemes and, if that is the case, it will be an issue with ASIC,” he says.

What to do with organisations that don’t fit into the approved external complaint schemes is another problem, Kell says.

“Homeless companies without a dispute scheme must find somewhere to provide an external complaints scheme,” he says.

“Some of the new players have signed up with organisations such as FICS, but ASIC will look at this issue after March 11.”

Membership of FICS now stands at 2,236 members, many of which are new to external complaints schemes.

Maynard says the organisation has appointed a national relations manager, Trevor Slater, to integrate the new members. FICS has also changed the way it handles complaints, with more emphasis in the future on conciliation.

It is also in the process of abolishing the opinion letter, which was sent to consumers dismissing their complaints. FICS director Jenni Mack says the external complaints scheme had been ‘tarnished’ with the opinion letter.

“We found that 97 per cent of letters sent to consumers said there was no basis for complaint,” she says. “Our research showed 67 per cent of consumers were dissatisfied with this.”

The research showed 53 per cent of consumers were satisfied with the between-parties resolution service, while 35 per cent were satisfied with determinations.

“Consumers who lost most of the cases were more dissatisfied with the (FICS) service,” she says.

“But these letters are now a thing of the past.”

Now, if an opinion letter is sent out, it must be signed by the chief executive or her deputy and the consumer can still go to the conciliation panel if they are not satisfied with the opinion, Mack says.

“If the consumer feels they have been fairly treated by FICS, it will counter the negative views against the (financial services) industry,” she says.

“It will also reduce the number of cases going to the courts, and that will improve the industry’s image.”