ASIC finds fault in super trustees’ complaints handling

Yasmine Raso

Senior Journalist, Financial Newswire

9 December 2022

A review conducted by the Australian Securities and Investments Commission (ASIC) on 35 superannuation trustees has resulted in a widespread notice to improve internal dispute resolution (IDR) and complaints handling systems.

This is the first notice delivered by the corporate regulator since it released mandatory reporting requirements of IDR data by all financial firms every six months in March this year.

Report 751 Disputes and deficiencies: A review of complaints handling by superannuation trustees (REP 751) details ASIC’s findings on the compliance of a sample of trustees related to the duties listed in Regulatory Guide 271 Internal dispute resolution (RG 271).

First reviewing 35 trustees and then focusing on a sub-set of 10 trustees, all of which had at least 50,000 members and over $10 billion in assets as of mid-2021, ASIC found several trustees first failed to respond to a large number of their complaints in a timely manner and under the set maximum timeframe of 45 days.

Most trustees also failed to notify complainants when their response exceeded this timeframe thus delaying their right to take the issue to the Australian Financial Complaint Authority (AFCA), and many written responses to the complaint failed to contain mandatory information related to the consumer’s right to go to AFCA.

“Superannuation fund members have a right to make complaints to their fund and to expect their complaints to be handled fairly and in a timely manner,” ASIC Commissioner, Danielle Press, said.

“Yet, our review found trustees have fallen short. We saw examples of trustees’ failure to comply with fundamental obligations, which could lead to poor outcomes, such as consumers abandoning a complaint rather than seeing it through.

“While a few trustees did the right thing, in many cases there were serious deficiencies in trustees’ dispute resolution processes and how they monitored and responded to complaints.

“As well, effective complaints handling is an indicator of a trustee’s healthy approach to risk. It not only drives good outcomes for members, but also helps trustees identify issues early and take action to build their members’ trust and confidence.”

ASIC also said some trustees fell short in managing systemic issues that arose from member complaints and failed to see them as an opportunity to improve their products and services, detect and address issues and improve their overall business.

The internal reporting process of trustees also “lacked sufficient detail to identify, much less remedy, deficiencies in complaint handling”.

ASIC said trustees will be required to take “prompt action” to repair the issues identified and report back on progress made.

“Having robust-end-to-end dispute resolution arrangements, designed with members’ interests in mind, is not a ‘nice to have, it’s a ‘must have’,” Press said.

“Trustees must prioritise investing in internal dispute resolution systems to meet their legal obligations. I strongly encourage all superannuation trustees to critically examine their dispute resolution arrangements based on our findings, make timely improvements and ensure they are fit-for-purpose going forward.”