Australia

Internal dispute resolution & RG 271

DILIP MOHAPATRA

• 8 min read
Internal dispute resolution & RG 271

RG 271 will replace RG 165 and takes effect for complaints received from 5 October 2021. It has several new requirements that are enforceable and other guidance to assist financial firms in complying with their legal obligations. Below are some of the highlights

  • The complaint’s definition should include complaints made on a social media channel or account owned or controlled by the financial firm that is the subject of the post, where the author is both identifiable and contactable.
  • ASIC has reduced the times allowed for responding to complaints.
  • When a financial firm rejects or partially rejects a complaint, the IDR response must set out the decision’s reasons.
  • When a customer advocate reviews a complaint following an IDR response, the total time spent dealing with the complaint must not exceed the relevant maximum IDR timeframe. The total time includes both the IDR process and the customer advocate review.
  • The guide also includes enforceable requirements around how systemic issues should be managed and clarifies that setting the accountabilities for complaints handling and managing systemic issues is a board responsibility.

The updated guide is intended not only to improve the quality of internal complaint resolution but will enable financial firms to deliver better outcomes for consumers and reduce the need to escalate complaints to AFCA.

IDR is the key to early resolution, which benefits consumers, financial firms, and the financial sector broadly. At the same time, most financial firms have developed the IDR process; more progress is needed in several key areas to create and maintain positive complaint management cultures that welcome complaints and focus on fair and timely consumer outcomes. It can start with a current state review of KPI, Process, People, Technology.

Designing or improving an IDR process is as simple as asking some simple questions and setting the goal.

  1. What data do we need to capture the complaint information and support an efficient, fair, and compliant process?
  2. How do we identify and record customer concerns and complaints?
  3. What should be our IDR response & how do we achieve an early resolution?
  4. How do we prevent escalation and support EDR?
  5. How do we achieve compliance and prevent systemic issues?
  6. What can we learn from complaints and enable a feedback loop with product design & distribution?
  7. What do we need to report to enable an efficient decision-making process and management accountability?

With clear goals, the right technology, and the right people on hand, the above questions can be answered pretty quickly.

Setting the IDR foundation

To develop and maintain a positive complaint management culture, financial firms should have a robust IDR process, including all procedures, documents, policies, resources, governance, and arrangements to manage complaints.

Capturing the correct information is an essential first step in resolving the disputes promptly, responding to the customers with the required information, and also supporting the governance requirements.

ASIC has adopted the AS/NZS 10002:2014 definition of ‘complaint’ as: “[An expression] of dissatisfaction made to or about an organization, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.”

So firms need to start with an organization-wide understanding of the definition of ‘complaint’ and the types of matters that must be dealt with in a firm’s IDR process. AS/NZS 10002:2014 is an excellent standard that can be referred to.

Additional metadata must be considered to align with AFCA’s resolution process and to support EDR.

Complaint identification

Monitor social media & other customer communication channels

Communication monitoring should not be limited to the Contact center and must include all customer communication channels, including Social media, Emails, and chatbots.

The new regulation requires social media monitoring where the social media channel or account owned or controlled by the financial firm is the subject of the post, where the author is both identifiable and contactable. Through monitoring, you can spot concerns and complaints and respond more efficiently, providing excellent customer care and compliance with RG 271.

Identify customer concerns & complaints early.

Firms need to identify customer concerns at an early stage instead of waiting for situations to be escalated and customers lodging complaints. Monitoring customer communication channels, including the contact center to identify customer concerns early, allows firms to resolve them proactively, concerns becoming complaints or complaints escalated to AFCA.

To identify customer concerns early, the most important question to ask what keywords/phrases to look for. Some examples of customer concerns: “I’m switching to…” “I’m not happy with” “cancel the account,” “close account,” “cancel service,” “stop service,” “incorrect fees,” “bad service.”

By creating an inventory of such “topics of interest” through metrics can help in prioritization. These topics should also include any potential areas that relate to systemic issues.

As a customer-focused organization, listening should be one of the key brand values. But sometimes, in the hustle and bustle of calls, the listening aspect can be overlooked.

Speech analytics can help identify the root cause of customer dissatisfaction and help you understand whether your call agents are focusing on listening. Also, it can help in determining how your agents are handling your customers and their issues. By identifying the reasons for customer dissatisfaction early, you can address the potential problems and encourage your customers to stay loyal.

First-call resolution (FCR) is an important contact center metrics and the element of customer relationship management (CRM). The term is self-explanatory: a contact center’s ability to resolve customer concerns, questions, or needs the first time they call, with no follow-up required.

Triaging complaints

It may sound a lot considering the volume of calls, but speech analytics can categorize the calls which require urgent attention. Categorization is the automatic tagging of certain language patterns, keywords, phrases, or other customer concern and complaint related characteristics. Categories allow you to find, count, and trend call that contains these characteristics.

IDR response & resolution

The update to RG 165 was also encouraged by the findings from ASIC’s on-site surveillance of the IDR process observed at some of the large firms, which had initially commenced to monitor whether they were complying with their regulatory requirements. The monitoring encouraged more stringent procedures for IDR after ASIC monitors found significant “deficiencies” and “delays” in the banks’ disputes and complaints processes.

Supporting the swift decision-making process

Whether it is a complex claims related dispute or a simple incorrect fee charged, the IDR processes should work efficiently and be capable of responding to each complaint in a timely and flexible manner. Firms should actively encourage staff to resolve complaints, wherever possible, at the first point of contact, including meeting the maximum IDR timeframes.

First call resolution is the important metric of customer care. The last thing your customers want is to be passed from agent to supervisor, back to another agent in another team, and so on.

Handling a complex case

Building a knowledge center and empowering your agents to take on more responsibility for resolving issues will help. So will call center features such as chat – giving agents the ability to ask a subject matter expert for solutions whilst still on the phone to the customer.

Besides the internal knowledge base, there is so much that can be learned from AFCA’s historical complaints data. AFCA makes some of this information available through its determination search publicly.

Cognitive View also has a developed an independent service called AFCA Insights “Analytics as a Service” that allows you to learn and gain a deeper understanding of historical financial disputes, AFCA’s decision-making approach, systemic issues, and actionable insights that you can learn from industry.

Responding to the customer

Both how and when the financial firm responds to complaints are enforceable as part of updated guideline. It should acknowledge receipt of each complaint promptly i.e. within 24 hours (or one business day) of receiving it, or as soon as practicable. And the final outcome of their complaint at IDR should include a lot more details and the options if the customer willing to take this up further with AFCA;

The maximum timeframe to respond to standard complaints will be no later than 30 calendar days after receiving the complaint (a reduction from the existing 45 days). These changes are designed to improve customer outcomes by reducing complaint handling delays by providing fair, timely, and efficient resolution of complaints about customers.

Supporting EDR

A successful complaint resolution with AFCA requires learning from the fundamental principles of AFCA’s complaint resolution approach and embedding them as part of your customer support, IDR, EDR, and compliance monitoring processes. It can start with a review process. This review should cover:

  • Benchmarking the firm’s complaints processes from end-to-end, making sure that all aspects of
  • performance is captured
  • Reviewing the firm’s performance against industry best practice, ensuring specific, meaningful,
  • and realistic comparisons and recommendations, enabling robust analysis and a clear path to
  • change, if needed
  • Looking at overall customer journey and processes, rather than organizational silos
  • Thorough reporting on performance and compliance to help identify constraints and evaluate
  • potential for improvement on an ongoing basis
  • Each firm will have its view on what AFCA referral rate is satisfactory but the lower this is, the better.

Meeting compliance

RG 271 requires clear accountabilities for the complaint-handling function to be in place as well as in-depth, board-level visibility of complaints. Many organizations do not have a clear link between compliance and complaints. The systems should support risk-based control automation and remediation. Below are some of the considerations that the risk and compliance team needs to make.

Identify obligations and policies that can be monitored

To monitor the IDR & EDR control effectively for compliance & conduct risk, firms need to consider monitoring:

  • Legal obligations
  • Applicable industry code of conduct or guidance
  • Contractual obligations & disclosure requirements
  • Company policies including consumer fairness

Identify gaps that may result in systemic issues.

A systemic issue is one that has been raised in a complaint or several complaints or is otherwise identified by information obtained by, or provided to, AFCA that is likely to affect a class of persons beyond any person who lodged a complaint or raised a concern. Several complaints of the same type or a single complaint may raise a systemic issue, provided that the effect of the issue may clearly extend beyond a single Complainant.

  • An inadequate disclosure document
  • A documented procedure that does not comply with legal requirements, for example, permits privacy requirements to be breached
  • A repeated complaint of a certain type highlights a procedural weakness that is liable to recur
  • Receipt of several new complaints about the same issue
  • Where the issue that affected the parties to the complaint could have affected others in a similar way
  • Where the complainant claims the issue affected others in a similar way

Monitoring outsourced IDR processes.

Some financial firms outsource part, or all, of their IDR process. Outsourcing might be to external parties or to other entities within a related corporate group. According to an enforceable RG 271.48 financial firm that outsources part, or all, of its IDR process remains responsible for ensuring that the service provider’s IDR processes comply with all the requirements in this regulatory guide.

Enabling feedback

Learning from customer complaints

Complaints can help firms support individual customers and provide insight into product and service improvements, and identify broader issues with compliance programs, internal controls, communications, and processes. Complaints can be turned into constructive opportunities in

  • Identifying vital areas for service improvement.
  • Identifying needed improvement in policies and procedures.
  • Improve customer communication.
  • Improve product design and distribution gaps
  • Meeting compliance: as part of the product design & distribution regulatory obligation (RG 274), Issuers and distributors must implement and maintain robust and effective product governance and monitoring arrangements to monitor managing risk complaints.
  • Identifying systemic risk

Reporting

Reporting & Actionable insights should go beyond the IDR team and needs to be customized and include some of the below roles

  • Product management & fund administrators
  • Complaints handling teams
  • Member-facing staff
  • Service providers
  • Operations
  • Risk and compliance
  • Legal
  • Trustees/directors
  • CEO/senior management

What can you do next?

Sign up for more like this.

Enter your email
Subscribe