The corporate regulator is consulting on consumer remediation guidance for Australian financial services licence holders and trustees of regulated superannuation funds.
The Australian Securities and Investments Commission (ASIC) released an updated draft and expanded regulatory guide on the way licensees should conduct remediations to return money owed to consumers.
It said proactive remediation upon discovery of misconduct or other failures was necessary for licensees to achieve good outcomes for consumers and comply with their licensing obligations to act efficiently, honestly, and fairly.
ASIC deputy chair, Karen Chester, said the most common “stumbling block” across remediations was underinvesting in systems which had led to multiple failures.
The top failure was delivering on promises to consumers, followed by identifying the failures, and being able to remediate consumer loss in a timely way.
“Recent experience has shown that poor conduct has significant financial implications for companies, their investors, and ultimately their customers. This is demonstrated by the costly lag and drag of remediation and reputational damage,” Chester said.
“Right now, ASIC is monitoring 64 remediations that will see the return of about $5.4 billion to more than 5.6 million consumers upon finalisation. There are many other remediations that are dealt with by firms without any ASIC involvement.
“We want our new guidance to help firms remediate with greater confidence and speed. Importantly, we have expanded our guidance to cover all financial services licensees, credit licensees and retirement service providers. Our draft guidance sets out how all licensees should act to ensure their remediations are conducted efficiently, honestly and fairly.”
Submissions were open to Consumer remediation: further consultation (CP30) until 11 February, 2022.