The Australian Securities and Investments Commission has flagged it may shorten the time superannuation funds are allowed to resolve customer disputes.
ASIC senior executive leader, investment managers and superannuation, Jane Eccleston, said the regulator is concerned the average time it takes super funds to finalise an internal dispute resolution process is 117 days.
“In our project work, we have found that the mean time for trustees to finalise complaints is 117 days; given that there is a 90-day requirement in the law this is very concerning to us,” Eccleston told the Conference of Major Superannuation Funds 2018, in Brisbane on Wednesday, March 14.
Following a plan unveiled in the 2017 federal budget to merge three external dispute resolution bodies – the Financial Ombudsman Service, the Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal – into a new one-stop shop, legislation was recently passed to establish the Australian Financial Complaints Authority.
Earlier this month, ASIC released a consultation paper that outlines how it is going to oversee AFCA’s operation.
There will be transitional arrangements in place for all outstanding complaints, but AFCA is going to start accepting new complaints no later than November 1, 2018.
“There will be steps that need to be taken by super funds to join the scheme, and they may consider updating any of the disclosures made about complaints handling in the meantime,” Eccleston said.
When it comes to responding to complaints, Eccleston said: “Trustees need to explain the complaint process well and give good written reasons for a decision that focus on the information needs of the consumer.”
She said that in the lead-up to the new dispute resolution body opening its doors later this year, ASIC wants trustees to focus on the internal dispute resolution practices in place at their fund.
A fund member must go through the internal dispute resolution process before seeking assistance via an external dispute resolution body.
Eccleston reminded the gathering of profit-to-member super fund trustees that the law requires internal dispute resolution process to be completed within 90 days and that written reasons must be provided for decisions.
“As part of the update to internal and external dispute handling, ASIC will need to consider updating its Regulatory Guidance note 165,” Eccleston said. “We are going to be consulting on that later, but we are not going to consult until after AFCA has started operations and a key focus of our consultation will be maximum IDR [internal dispute resolution] times.”
Eccleston flagged that given high rates of non-compliance with the 90-day rule, ASIC would consider shortening the time funds are allowed.
“We have to raise the question as to whether that timeframe needs to be shorter,” she said.
In conclusion, Eccleston said the key message she wanted to leave trustees thinking about was that the launch of the new system provided a good opportunity to overhaul their internal processes.
“It is a really good time to consider your internal dispute resolution processes ahead of any changes that are going to come in with IDR reforms,” she said. “We [ASIC] want to really support a smooth implementation of AFCA.”
Eccleston made her comments during a panel session titled, “What’s on the regulators’ radar”, where she spoke alongside Australian Prudential Regulation Authority general manager Stephen Glenfield and Australian Taxation Office deputy commissioner, superannuation, James O’Halloran.
READ MORE: All the coverage from CMSF 2018
