[co-author: Tamsyn Sharpe]
ASIC has recently published its findings following an investigation into the insurance industry’s level of compliance with internal dispute resolution (IDR) obligations. Report 802 Cause for complaint: Complaints handling in general insurance revealed that general insurers are consistently falling short of their legal obligations thereby limiting customers’ ability to access fair, timely and effective IDR processes.
IDR Obligations
ASIC Regulatory Guide 271 (RG 271) imposes enforceable IDR obligations on insurance providers. Complaints handling mechanisms must provide for the proactive identification of customer complaints and accurate recording of all complaints received. Complaint responses must include prescribed information such as information regarding the customer’s right to escalate the matter to the Australian Financial Complaints Authority (AFCA) and AFCA’s contact details and comprehensive reasons where a complaint has been rejected. For most complaints, a written response must be provided within 30 calendar days. However, where, due to the complexity of the complaint or circumstances beyond the insurer’s control, a response is unable to be provided within this time, a delay notification must be provided to the customer, informing them of the reasons for the delay and their right to escalate the complaint to AFCA.
ASIC’s Findings
Takeaways
ASIC’s findings demonstrate that insurers are consistently failing to comply with their obligations under RG 271. What is most concerning is that many enforceable obligations contained in RG 271 have been repeatedly ignored by licensees. While the review was limited to general insurers, ASIC noted the relevance of its finding to all financial firms. Entities bound by RG 271 must develop and implement action plans to promote compliance with their IDR obligations. Appropriate mechanisms should foster a positive complaints management culture which seeks to achieve better outcomes for customers.
