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Superannuation Facing challenges in IDR compliance

Wednesday 10 August 2022


 

The superannuation industry might be in trouble with the conduct regulator falling short with their internal dispute resolution systems.

Australian Securities and Investments Commission (ASIC) conducted  surveillance looking at regulated entities alignment with the Regulatory Guide 271 Internal Dispute Resolution.

ASIC commissioner Danielle Press said in an official statement  this week , “However, 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.”

ASIC looked 35 trustees of 38 funds which covered  49,029 complaints received between October 2021 and February 2022.
 
ASIC highlighted some particular findings:
  • 10 per cent of the funds there are less than  10 complaints for every 10 000 members which less that the overall
  • Seven of the 38 Firms have been over-applying the limited exceptions  to the maximum timeframes
  • 50 per cent of time  complainants were not notified of their right to the Australian Financial Complaints Authority (AFCA)
  • One in three trustees reported process failures to the regulator
 
Data Reporting Requirements
This comes a month after the Australian Securities and Investments Commission (ASIC) published their data reporting requirements.

At the time the ASIC Commissioner Karen Chester said, “The data will give greater and public visibility of where harms may be occurring, across the financial system and down to the firm level. It will also elevate ASIC’s ability to be a data driven regulator. Ultimately, we all want to see consumers benefit when firms use this data to benchmark, even compete on, their IDR performance and to improve the way they respond to consumer complaints in practice.”
 
In a recent podcast with GRC Institute Strategic & Engagement Consultant Carole Ferguson said that the data reporting requirements were going to be a challenge for compliance professionals. 

“It’s intended to help consumers by making he whole process of IDR easier. The timeframes have been shortened dramatically. Essentially, they have been halved  for superannuation and that’s going to make a very difference ASIC view, and sadly it was possibly correct,  that industry were reporting to 45 days because that was the time limit. They weren’t reporting in shorter periods of time  because they had longer to report.

What has been impact of the change?

“Now there is bonus, for want of a better word, in resolving in under five days because then you don’t have to the IDR reporting so there is actually a pressure on firm s to try to resolve things quicker, but you can’t resolve things if there is no good will in the firm , if you don’t have resources to be able to do it and of you don’t have the systems to be able to access the information that is underlying it. So, when you look at it it’s a laudable timeframe to get it done within five days but that requires tremendous interface between various parts of the business and getting people to do things--to drop everything to do complaint is going be a very interesting cultural change within firms.”

Ferguson argued that the regulator’s expectations is that firm will have IDR specialists  to meet these tight timeframes.

 “You going to have to have somebody who is responsible for the reporting and somebody who is actually responsible for the management of the complaints as they come through.”
 
A warning to super trustees
Press added, “ASIC warned trustees that they needed to prepare for compliance with the enforceable requirements in RG 271. We expect all trustees to have in place effective arrangements that support expressions of dissatisfaction from their members and deliver fair, transparent and timely member outcomes. Trustees should continually monitor and update their processes to ensure these remain fit-for-purpose.”
 
 
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