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ASIC identifies significant super fund IDR shortcomings

Mike Taylor10 August 2022
Two gold cogs with regulatory and compliance written on them for ASIC

The Australian Securities and Investments Commission (ASIC) has identified what it describes as “significant compliance issues” with respect to the internal dispute resolution (IDR) arrangements of superannuation funds.

Releasing the results of a surveillance exercise, ASIC said it had identified problem areas that need fixing.

Among the problem areas, ASIC noted recording complaints, response times, informing complainants of delays and process failures

ASIC commissioner, Danielle Press said trustees had been warned they needed to prepare for compliance with enforceable requirement.

She said ASIC would be initiating the next stage of surveillance to check whether the concerns it had identified were being addressed.

Observations based on data collected

  • Recording of complaints: RG 271 requires trustees to record allmember complaints. Overall, funds recorded complaints at a rate of 30 for every 10,000 members (calculated using the number of member accounts that the funds had as at 30 June 2021). However, 10% of the funds that ASIC looked at recorded less than 10 complaints for every 10,000 members. This is significantly lower than the overall rate. ASIC is concerned that the low complaint rate may be a result of some trustees failing to record all member complaints or adopting an inappropriately narrow definition of ‘complaint’
  • Response timeframes: Across the 38 funds reviewed, 2.7% of the total IDR responses were sent after the 45-day maximum timeframe generally required under RG 271. Of these, seven funds sent out 10% or more of their IDR responses after 45 days. ASIC is concerned that trustees may be over-applying the limited exceptions to the maximum timeframe or not sufficiently monitoring how long complaints take to resolve.
  • Informing complainants of delays: RG 271 requires trustees to notify complainants of delays and their right to go to the Australian Financial Complaints Authority when a written response to a complaint is not sent within 45 days. However, ASIC’s review found that in such circumstances, complainants were not notified nearly 50% of the time.
  • Process failures: One in three trustees advised ASIC that there were varying degrees of process failures or errors in their IDR systems. These included identifying or capturing complaints correctly, omitting mandatory content from IDR response letters or failing to send out IDR responses for some complaints.
Mike Taylor

Mike Taylor

Managing Editor/Publisher, Financial Newswire

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Researcher
1 year ago

Significant short comings yet not one trustee fined, banned, named or shamed. On the other hand an adviser hands out a FSCG a day late and they risk losing their livelihood. Is anyone listening? Michelle Levy do you understand yet why advisers fear ASIC and product manufacturers/trustees know they can get away with murder.

Bee Real
1 year ago

Be of interest to know which specific funds they monitored, whether it was just retail or included ASIC’s mates in industry fund land.

Likewise, interesting the comparison between how much leeway ASIC give super trustees in regard to having deficient complaints resolution processes versus what a financial planning business or smaller AFSL like Dover would/did receive.

Paul Schroder
1 year ago

Since when do we have to respond to member complaints LOL