Research by the corporate regulator into consumer experiences of internal dispute resolution (IDR) procedures across the financial services sector has found they face significant barriers and difficulties in navigating the complaints process.
The Australian Securities and Investments Commission’s (ASIC) “Report 603: The consumer journey through the internal dispute resolution process of financial services providers” found only 45 per cent of complainants who received an unfavourable outcome were given an explanation of the decision made against them by the firm.
Only 21 per cent of complainants whose complaints were not resolved in the time frame set by ASIC guidance had the external dispute resolution (EDR) process explained to them.
ASIC said it is particularly concerned about the second finding, saying each of the steps in the process is vital to aid consumers to effectively escalate their complaint to an independent and external forum.
Since 1 November, this forum has been the Australian Financial Complaints Authority.
Consumers had several reasons for making a complaint against financial services firms, resulting in an overlap between different complaint reasons. Almost half (46 per cent) of those complaining about financial advice were also doing so due to fees and charges.
There was a high level of crossover between product sales and almost all other categories of complaints.
For example, 46 per cent of those who complained about fees and charges complained due to product sales, while 48 per cent who complained about customer service did so due to product sales.
Meanwhile, 45 per cent of those complaining about financial advice also cited product sales as a reason for their complaint.
The research also found 17 per cent of Australians aged 18 and over considered making a complaint to a financial firm in the preceding 12 months, while 8 per cent actually continued on to do so.
Almost half of those who did not make a complaint admitted they did not think it would make a difference or it was not worth their time, while 18 per cent dropped out or withdrew their complaint before it was concluded.
The credit sector had the highest incidence of consumers considering making a complaint and those who made a complaint, with 3 per cent of consumers making a complaint regarding a credit product in the past 12 months. The superannuation sector had the lowest incidence of complainants and considerers.
ASIC commissioner Danielle Press said: “Making a complaint can be a stressful exercise for many people and there are clear opportunities for financial services firms to improve consumer experience and outcomes.”
The regulator said a specialist team has been established under its Close and Continuous Monitoring Program to conduct onsite monitoring of the IDR functions at the big four banks and AMP.
The team will review and assess the firms’ IDR arrangements, including processes, practices and resourcing, and will map and evaluate their systems capabilities.
