The corporate regulator is asking the industry for submissions for its consultation paper 335 (CP335) on consumer remediation as it has released a consultation paper on proposed updates to regulatory guide 256.
In announcing the consultation, the Australian Securities and Investments Commission’s (ASIC’s) acting chair, Karen Chester, said putting money back into Australian consumers’ hands had never been more important.
“Ensuring that the processes for returning this money are efficient and fair is central to consumer confidence and trust in financial products and services and in the firms themselves,” she said.
ASIC said CP335 included clarification of RG256’s application to all financial services licensees, credit licensees, and superannuation trustees.
ASIC said while it had seen some good practices by licensees it had seen many remediations caused – or blown out – by ongoing systems failures, which ultimately resulted in significant costs to licensees and further harm to consumers.
“There are opportunities for firms to not only identify the issues that can lead to remediations earlier, but also to make sure that they have arrangements and systems in place to return money to affected consumer as fast and as fairly as possible,” Chester said.
“We are also seeing some positive signs from firms who are looking at ways to fast track remediations, including through the use of beneficial assumptions.”
ASIC said CP335 gave industry and stakeholders the opportunity to provide feedback about the challenges they faced in designing and executing remediations. It included real-life case studies based on remediations in which ASIC had been directly involved.
“We want firms to get on with the job of doing fair and efficient remediations in line with their legal obligations,” Chester said.
“The issues we are consulting on reflect the questions that firms frequently ask ASIC. Clarity on these issues will help firms step up and deliver good consumer outcomes.”
ASIC noted it was currently monitoring over 100 remediations that could see the return of at least another $3.55 billion in total to over 3.6 million consumers. Since October, 2019, about $1.68 billion had been returned to consumers in relation to finalised and ongoing financial system remediations.
Submissions on CP335 were due by 26 February, 2021.
