ASIC confirms outcome of IDR ‘name and shame’ plans for AFSLs

ASIC has shelved plans to “name and shame” AFSLs over their reportable situations following negative feedback from industry stakeholders, but will maintain it for the internal dispute  resolution (IDR) regime.

In April, the corporate regulator announced submissions were open for plans to publish firm-level data on the reportable situations and IDR regime. This would see firm-level data go public, ASIC stated, including businesses’ names and Australian Financial Services Licence (AFSL) numbers.

The publication of the dashboards aimed to boost transparency, drive improved performance, and help deliver better consumer outcomes, explained ASIC commissioner Alan Kirkland.

“Publishing reportable situations and internal dispute resolution data will encourage firms to lift their game. It also provides consumers and investors access to this data at firm level, further encouraging confident and informed participation in the financial system.”

However, with submissions now closed and 47 received, the regulator said it has opted to hold off pursuing this public enforcement route for reportable situations. Feedback to the proposals centred around data and privacy sensitivity concerns and the additional regulatory burden. For the IDR, many submissions raised concerns about comparisons between firms and about the privacy implications of publishing some categories of complaint demographic data at a firm level.

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Submissions were received from organisations such as the Australian Financial Complaints Authority (AFCA), Financial Advice Association Australia, Financial Services Council, and Stockbrokers and Investment Advisers Association (SIAA).

In SIAA’s submission, it said: “SIAA fundamentally opposes ASIC’s approach to the publication of firm-level IDR and reportable situations data that includes firms’ names and licence numbers.

“Using licensees’ data to publicly name and shame them is a completely inappropriate use of data that licensees are required by law to report to ASIC.”

Meanwhile, compliance firm Assured Support’s managing director Sean Graham told Money Management that it could have the opposite effect and lead to under-reporting of reportable situations.

“I think it’s going to lead to under-reporting because people know that it’s going to be public. If you’re a participant, would you want to be identified as being top of the box for complaints? If you’re worried about under-reporting, publishing their names is not going to encourage them to come forward.

“If participants think that the purpose of the public listing, for example, is to discipline or shame or embarrass – it might have that effect. Then they’re unlikely to do it. That’s just human nature.”

ASIC’s decision

Following the consultation, ASIC said the dashboards will not show individual breach or complaint details or names of authorised representatives for RS data.

The reportable situations regime requires licensees to submit reports of any breaches, and is used by ASIC to identify any emerging trends and detect non-compliant behaviour.

“After considering the consultation feedback, we will not publish firm-level RS data. We will publish aggregated, industry-level RS data in an interactive dashboard. Users will be able to draw insights into the nature and impact of breaches reported and how industry is identifying and responding to those breaches. Compared to previously published static reports, this format will support increased access to and engagement with more granular data for firms, consumers, and other stakeholders.

“In reaching this decision, we sought to balance the benefits of firm-level transparency against concerns around the impact of changes to licensees’ reporting obligations under the RS regime.”

However, it will proceed with plans to publish the data on the firm-level for the IDR as it believes this is consistent with the regime’s purpose. 

Although firm data will be published, it will exclude demographic data, postcode data, and whether the complaint is about an authorised representative. Instead, it will emphasise average (mean) and median resolution times, as well as distribution of complaints resolved within set time frames, including maximum IDR time frames, and timelines showing complaints received aggregated to the reporting period.

“Publishing firm-level IDR data is consistent with the purpose of the IDR data collection regime and our longstanding public position, and aligns with the existing publication of firm-level external dispute resolution (EDR) data by AFCA. It encourages firms to improve IDR outcomes, practices and reporting, and we expect it will promote consumer confidence in the financial services industry.

ASIC is set to publish the RS dashboard in October, in line with legislative requirements, with the IDR dashboard to be published later this year.