Financial services providers, including general insurers, must improve complaints handling after the Australian Securities and Investments Commission (ASIC) highlighted problems with internal dispute resolution (IDR) processes.
Several obstacles stand in the way of consumers when they try to raise a complaint, ASIC-commissioned research found, and their experiences have marred their confidence in the system.
Fewer than half of complainants who had an unfavourable outcome received an explanation from the firm, and only 21% of complainants whose disputes were not resolved within the set timeframe had the process explained to them.
Left unchecked, the fallout has potential to impact the effectiveness of the external dispute resolution scheme, which takes over when disputes can’t be resolved via IDR.
IDR is the first port of call in any financial dispute and plays a vital role in the consumer protection framework, ASIC Commissioner Danielle Press says.
“Consumers and small businesses should have access to transparent, fair and timely complaints processes,” she said.
“Our research shows the strong connection between consumer satisfaction in how a firm deals with a problem, and their confidence in that financial firm.
“Making a complaint can be a stressful exercise for many people and there are clear opportunities for financial services firms to improve consumer experience and outcomes.”
The research involved qualitative and quantitative surveys plus in-depth interviews with complainants or consumers considering lodging a complaint against a financial service provider, including insurers.
One in seven complainants had difficulty locating the firm’s contact details to make a complaint, almost a quarter felt the IDR process was not well explained at first contact and 27% were unsure how long it would take before a decision was made.
Consumers also felt let down by the standards of customer service. About 28% say they were not listened to, and 22% believed they were passed around by the provider.
While 17% of respondents contemplated lodging a complaint, only 8% went ahead. Almost half of those who decided against taking action did so because they believed it was not worth their time or effort, and would not make a difference.
“All financial firms should closely review the research findings and consider whether their complaints procedures need to be reformed to improve the experience for consumers and to ensure that identified problems are remedied effectively and promptly,” ASIC says.
“Firms should also prepare to engage with ASIC about its review of the complaints handling standards and requirements.”