Financial advice firms and others involved in remediating clients should err on the side of consumers even if they lack all the facts to back up such a move, according to the Australian Securities and Investments Commission (ASIC).
That is one of the messages delivered by ASIC in a new resource document – Making it right: How to run consumer centered remediation – which the regulator says offers immediate help to licensees with the day-to-day design and execution of consumer-centred remediations.
But, at the same time, ASIC has made clear the resource draws on “ASIC’s on-the-ground experience with remediations and lessons from behavioural science. It does not set new legal obligations”.
It argues that licensees should identify their knowledge gaps and “consider using beneficial assumptions”.
“If there are still gaps in your knowledge, work out how you may fill them. You might decide to make beneficial assumptions, either because you cannot fill your knowledge gaps or because it is more efficient to do so. If you make assumptions, these should benefit the consumer and be tested and monitored,” the ASIC resource said.
“At all stages of the remediation, the consumer should not be disadvantaged by your lack of data or information.”
ASIC has called for industry feedback on the document, with stakeholders having until 26 February, next year, to give their views.
ASIC acting chair, Karen Chester, said there were 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.
“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,” she said.
“CP 335 gives industry and stakeholders the opportunity to provide feedback about the challenges they face in designing and executing remediations. It includes real-life case studies based on remediations in which ASIC has 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.”
