Financial firms are required to maintain clear internal dispute resolution (IDR) processes to allow customers to seek redress where they are dissatisfied with the firm’s products or services. Access to fair, timely and effective IDR is an important tenet of consumer protection. Financial firms are required to acknowledge the receipt of a customer’s complaint within 24 hours and resolve standard complaints within 30 days.

Compliance Concerns

Financial firms are required to lodge bi-annual IDR reports with the Australian Securities and Investments Commission (ASIC) detailing information about complaints received during the relevant period. ASIC’s recently published Report 801 analyses the data collected under this requirement. Data presented in the Report will provide a baseline for trend reporting in future IDR publications.

In the Report, ASIC expresses its concerns about the quality and accuracy of financial firms’ IDR data and observes multiple issues with IDR reporting including:

• large variations in complaint numbers between comparable firms;
• overuse of “other” or “unknown” categories;
• reporting gaps related to products or issues; and
• a high number of firms having no complaints to report.

ASIC expects all financial firms to comply with their IDR obligations, including the enforceable provisions contained in ASIC’s Regulatory Guide relating to IDR, RG271.

IDR Insights

Of the 7,051 financial firms which submitted IDR reports for the period 1 July 2023 to 30 June 2024, 5,035 firms disclosed having received no complaints. The number of such ‘nil submissions’ was much higher than ASIC had expected.

Complaint Categories

An analysis of the IDR data received revealed that over 4.7 million complaints were lodged during the period, with 2,420,611 of those relating to banking and finance products. General insurance complaints were the second highest category at 1,561,824 while the lowest complaints category was life insurance products with only 54,896 complaints.

The three products that were the focus of the most complaints were general insurance products, credit products and deposit taking products. Issues-related complaints were about service, charges and transactions.

Turnaround

Over three quarters of complaints received were resolved within one day. Same-day resolution was highest for general insurance (76%) and closely followed by banking and finance (71%). In contrast, life insurance complaints had the lowest same-day turnaround of 51%.

Outcomes

The most common complaint outcome involved an explanation or apology only, or no remedy. Of the 4.7 million complaints received by financial firms, only 623,555 (13%) resulted in the complainant receiving a monetary remedy. The form of such monetary remedies varied and included compensation, waiver of fees or charges, or a reduction in ongoing fees or charges.

What’s next?

Financial firms are on notice that ASIC will continue to closely monitor firms’ compliance with IDR obligations and take action where necessary for compliance failures. In 2025, ASIC will be publishing firm-level data in order to promote transparency in the financial services industry. In doing so, ASIC seeks to encourage financial firms to foster ‘a positive complaints management culture that delivers quality outcomes for consumers’.