Trivialities in ASIC’s regulatory definition of ‘complaint’
Superannuation funds are urging the Australian Securities and Investments Commission (ASIC) to pursue a more appropriate definition of ‘complaint’ for the purposes of internal dispute resolution (IDR).
They are doing so because they believe the current definition used by ASIC in Regulatory Guide 271 (RG 271) is so wide that it ends up tying up resources to deal with the trivial matters.
The Association of Superannuation Funds of Australia (ASFA) has told pointed out to ASIC that RG 271 Internal dispute resolution adopts this definition of ‘complaint’, as set out in in AS/NZS 10002:2014: “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”.
“This definition contains no element of materiality or harm to the consumer, financial or otherwise,” it said. “It requires RSEs [superannuation funds] to apply their full IDR process to even very trivial and vexatious matters raised by members that have no bearing on the administration or value of their superannuation account and do not point to any failure of service by the RSE.”
“For example, ASFA members have provided examples of ‘complaints’ that are, in truth, simply expressions of preferences or opinions about the tone (not the content) of advertising, or the adoption of a logo/branding tool,” ASFA said.
It said the need to track and report such matters as ‘complaints’ involves the application of resources which ultimately adds to the costs carried by superannuation funds and, therefore, ultimately members.
“It also risks diverting the focus of RSEs, ASIC and AFCA from substantive complaints. In ASFA’s view, there needs to be recognition that while every complaint deserves consideration, a proportionate approach should be adopted, where the seriousness and potential impact of a complaint inform the intensity of response,” it said.
“ASFA considers there would be benefit in ASIC and AFCA working with the superannuation industry to identify potential improvements to the regulatory framework for superannuation complaints.
“This should reinforce the operation of the complaints framework as a mechanism for early identification and remediation of genuine consumer harm, rather than as an administrative endpoint for minor grievances.
“The adoption of a proportionate approach should ensure that consumer protection objectives are achieved without the misallocation of resources to trivial or vexatious matters,” ASFA said.
Good luck ASFA. ASIC can’t spell materiality nor nuance let alone understand it. Patronising nanny state rules ok.
Nothing quite captures ASIC’s anti-pragmatism and anti-common-sense ideology than this issue. The definition of ‘complaint’ has been stretched so wide it’s become meaningless—capturing expressions of dissatisfaction about anything, regardless of whether there’s any actual client loss or detriment whatsoever.
This is a textbook example of importing “global ISO standards” under the banner of “local standards,” then wondering why it grinds the machinery of business to a halt. It’s pouring sand into the gears. And it’s not just superannuation—this absurdity spans the entire financial services sector.
You’re dialing up costs across banks, wealth managers, investment firms, insurance providers, and every other financial services player. Adding friction to every interaction. Ultimately hitting consumers in their hip pocket—all while protecting absolutely nobody. Members and customers end up paying for the administrative burden of processing complaints about logo preferences and advertising tone.
The irony is that by forcing financial services providers to treat trivial matters with the same intensity as genuine service failures, you’re actually diluting the system’s ability to identify and respond to real consumer harm. ASFA is right: this doesn’t make the system more protective. It just makes it more expensive and less effective.
A proportionate approach isn’t asking for less regulation. It’s asking for regulation that actually makes sense—one that distinguishes between genuine consumer detriment and minor grievances, and allocates resources accordingly. Instead, we’ve got a system that treats them identically, wastes resources, and ultimately fails both consumers and the firms trying to serve them properly.
That’s not consumer protection. That’s regulatory theater.
I’m very much of the view that this nonsense is exactly what ASIC likes.
It allows them to stretch their focus of enforcement when it is convenient to do so in the future.
Time for a royal commission – this is well beyond a joke now.