Two-thirds of firms who have implemented remediation in the past 12 months are financial advice licensees, according to research.
Research by financial services law firm Holley Nethercote has accounted for over 200 Australian Financial Services or credit licensees (AFSL/ACL). These include 106 financial advice licensees and 66 general advice ones.
Just over half (51 per cent) said they have implemented remediation once over the last 12 months and 36 per cent said two to five times.
Only 4.8 per cent said they’ve done so more than 10 times. The firm noted this is mainly large licensees with more than 100 representatives.
“Of those licensees that had implemented remediation, more than two-thirds were advice licensee businesses.
“Smaller licensees had only done so once (80 per cent) or two to five times (20 per cent). At the other end of the spectrum, 20 per cent of respondents with more 100 representatives had done so more than 10 times.”
Looking at complaint resolution, the most common forms of resolution are explaining the circumstances, providing an apology when appropriate and offering rectification or monetary compensation.
Only 15 per cent of smaller licensees have offered compensation in the resolution of complaints compared to an average of 43 per cent across all firms.
The review also noted complaints were required in writing at 31 per cent of firms, rising to 50 per cent for small licensees, conflicting with expectations from ASIC in its Regulatory Guide 271.
Zoe Higgins, special counsel at Holley Nethercote, said: “If you require a complaint to be shared in writing, that would be a breach of your obligations because you aren’t complying with ASIC RG 271 which is about the principles of accessibility. You can’t say it has to be written, if they make it over the phone then it needs to be recorded in some way by the licensee.”
ASIC RG 271 states: “A consumer or small business is not required to expressly state the word ‘complaint’ or ‘dispute’ or put their complaint in writing to trigger a financial firm’s obligations to deal with a matter.
“A response or resolution is ‘explicitly expected’ if a consumer clearly requests it. It is ‘implicitly expected’ if the consumer raises the expression of dissatisfaction in a way that implies the consumer reasonably expects the firm to respond and/or take specific action.”
The Holley Nethercote report previously found firms were spending significantly on internal compliance with some 13 per cent of firms with less than 100 staff and representatives paying over $1 million annually in employing compliance staff including salaries and contract fees. A further 45 per cent of firms of this size spend between $500,000 and $1 million.
In addition, firms also need to spend externally, with a quarter of small firms spending more than $500,000 on external assistance, rising to 44 per cent for firms with over 100 staff and representatives.
