Superannuation trustees are on notice to improve their internal dispute resolution systems after a targeted review of trustee compliance with the enforceable complaints handling requirements found that some trustees had sub-standard arrangements for managing complaints.
Report 751 Disputes and deficiencies: A review of complaints handling by superannuation trustees (REP 751) outlines ASIC’s findings on compliance by a selection of trustees with the obligations in Regulatory Guide 271 Internal dispute resolution (RG 271). ASIC selected 35 trustees for an initial review, followed by a more detailed review of a subset of 10 trustees.
‘Superannuation fund members have a right to make complaints to their fund and to expect their complaints to be handled fairly and in a timely manner,’ ASIC Commissioner Danielle Press said. ‘Yet, our review found trustees have fallen short.’
‘We saw examples of trustees’ failure to comply with fundamental obligations, which could lead to poor outcomes, such as consumers abandoning a complaint rather than seeing it through. While a few trustees did the right thing, in many cases there were serious deficiencies in trustees’ dispute resolution processes and how they monitored and responded to complaints,’ Ms Press said.
- RG 271 sets a maximum timeframe of 45 days (with limited exceptions) to issue a written response for complaints about superannuation that are not an objection to the distribution of a death benefit. ASIC’s review found a number of trustees did not respond to a significant portion of their complaints in a timely manner.
- Most trustees failed to ensure all complainants were kept informed when their response to the complaints exceeded the maximum timeframe. This could delay complainants exercising their right to go to the Australian Financial Complaint Authority (AFCA).
- Too many written responses to complaints omitted mandatory content related to a consumer’s right to take their complaint to AFCA.
- There were gaps in how most trustees managed systemic issues that could be identified through member complaints or how they used intelligence from complaints to improve their products and services. We consider this a missed opportunity for trustees to detect and address issues that impact their wider membership, thereby improving their business and minimising future problems.
- Trustees’ internal reporting often lacked sufficient detail to identify, much less remedy, deficiencies in complaint handling.
ASIC is writing to these trustees about issues specific to their compliance with RG 271. The trustees will be required to take prompt action to remedy the issues identified and the majority will need to report to ASIC on improvements made. ASIC is also considering other regulatory action where more serious concerns were identified.
‘Having robust-end-to-end dispute resolution arrangements, designed with members’ interests in mind, is not a ‘nice to have, it’s a ‘must have’, Ms Press said. ‘Trustees must prioritise investing in internal dispute resolution systems to meet their legal obligations.'
‘As well, effective complaints handling is an indicator of a trustee’s healthy approach to risk. It not only drives good outcomes for members, but also helps trustees identify issues early and take action to build their members’ trust and confidence.'
‘I strongly encourage all superannuation trustees to critically examine their dispute resolution arrangements based on our findings, make timely improvements and ensure they are fit-for-purpose going forward.'
‘ASIC will continue to closely monitor trustee compliance with RG 271. Where we identify serious compliance failures impacting consumers, we will take regulatory action, including enforcement action where appropriate, to address harm,’ Ms Press said.
REP 751 is accompanied by Report 752 Review of written responses to superannuation complaints (REP 752), prepared by Susan Bell Research. REP 752 contains noteworthy insights and practical tips for writing consumer-centric responses to complaints. This report may be helpful to all financial firms.
For REP 751, ASIC reviewed complaints handling by a selection of trustees covering a mix of industry, retail and corporate funds as well as a public sector fund. Each fund had at least 50,000 members and predominantly over $10 billion in assets as at 30 June 2021. The review was undertaken in two stages:
- Stage 1: 35 trustees in relation to 38 super funds for the period 5 October 2021 to 28 February 2022. Together, these funds held over $1.5 trillion in assets across 16.5 million member accounts (based on APRA data as at 30 June 2021). ASIC’s observations from Stage 1 highlighted variability in trustees’ complaints handling arrangements (refer 22-213MR).
- Stage 2: a sub-set of 10 trustees from Stage 1 in relation to one super fund each, reviewed in more detail for the period 5 October 2021 to 30 June 2022. These trustees were selected based on a range of attributes that ASIC wanted to explore further. Together, these funds held approximately $361 billion in assets across 5.1 million member accounts (based on APRA data as at 30 June 2021).
ASIC's work in relation to some of these trustees is ongoing and so, consistent with ASIC's usual practice, they have not been identified in the report.
This work is part of ASIC’s broader focus on internal dispute resolution (IDR) across the financial services sector. In March 2022, ASIC released mandatory requirements for IDR data reporting by all financial firms (refer 22-071MR). From 2023, all financial firms, including trustees, must report IDR data to ASIC every six months.