ASIC places increased remediation onus on licensees

Mike Taylor

Managing Editor/Publisher, Financial Newswire

27 September 2022

The Australian Securities and Investments Commission (ASIC) is placing greater pressure on financial services licensees to pursue remediation of clients, stating that the regulator should not need to be overseeing remediations to ensure fair and timely outcomes.

ASIC deputy chair, Karen Chester emphasised the obligations of licensees at the same time as releasing expanded guidance on consumer remediation.

In doing so, she said that as at June this year, the regulator was monitoring 36 remediation activities across superannuation, advice, credit and banking and insurance whereby $3.25 billion had been paid or offered to over 3.4 million consumers and a further estimated $1.6 billion is yet to be returned to around 2.7 million consumers.

“The release of our expanded guidance, along with the updated Making it right field guide, delivers licensees all they need to achieve the right remediation outcomes on their own. It explicitly allows the use of assumptions, to help firms address knowledge gaps and accelerate remediation programs in a way that does not disadvantage consumers,” Chester said.

“Licensees must also do better at identifying and remediating problems earlier to avoid the costly lag and drag of remediation. The common stumbling block we have seen across remediations is underinvestment in systems. This underinvestment has led to a trifecta of failures. First and foremost, in delivering on promises to consumers, second in identifying the failures and third in being able to remediate consumer loss in a timely way.”

“Going forward, while ASIC may need to intervene in some isolated cases, we cannot and should not oversee remediations in order for consumers to receive fair and timely outcomes,” Chester said.