Cast your minds back to last year when the ASIC issued guidelines to shorten the time financial institutions have to resolve most internal complaints from 45 to 30 calendar days. This change will come into effect as early as next month!
How did they come to this decision?
According to ASIC independent research into the consumer experience of the internal dispute resolution (IDR) processes of financial firms, out of the 17 per cent of Australians considered making a complaint, less than half actually lodged a complaint. The rest thought it would not be worthwhile or make any difference. And 18 per cent of the complainants withdrew their complaint before it was even concluded. In addition, the Royal Commission pointed out serious deficiencies in addressing concerns brought about by consumers.
Therefore, the ASIC decided that financial firms need to up their dispute resolution this year. The new rules were then introduced to make sure consumer and small business complaints are resolved in a more timely manner.
Banks are changing their models
The response from the banks was quite simply making cutbacks somewhere to meet the 30-day grandiose goal set by the ASIC. As a result, the big banks had removed the ability of unhappy borrowers to appeal to internal customer advocates due to fear of running out of time to decide claims.
Allow us to elaborate on that point. Previously, if a customer wasn’t happy with the way the internal dispute resolution team handled their complaint, the customer could always appeal to a customer advocate. Customer advocates were first introduced in late 2016 as the next level up from the regular complaints department to improve a bank’s ability to resolve disputes.
The new ASIC rules have brought forward the big banks’ decision to strengthen their complaints divisions so customers won’t feel the need to go through advocates anymore.
NAB scrapped the appeal role in April 2020 after the ASIC signalled that it wanted to reduce the time allowed to resolve complaints. Westpac and the CBA followed suit late last year. ANZ was the last of the big four banks to remove the right to appeal to its customer advocates on Thursday last week.
ANZ sent an email to its home loan customers saying: “The consumer lending terms and conditions are being updated to remove the customer advocate as a review option if you make a complaint or have a dispute with ANZ and are not satisfied with our resolution of your complaint.”
Now, customer advocates will take an advisory position, “supporting fair outcomes across the overall complaints process and in other forums where sensitive customer decisions are made” – said in a statement by the ANZ.
Many are left questioning whether this decision could set the banks up for failure. If customers are unhappy with a bank’s internal review, they will have to bring their complaints to the Australian Financial Complaints Authority (AFCA) which could take even longer to resolve. Once accepted by the AFCA, a bank has 21 days to respond to that complaint and a ruling can take an additional 6 weeks to 3 months. We are still waiting for the ASIC to make further comments.
Main source: https://www.theguardian.com/australia-news/2021/sep/03/australian-banks-shut-down-internal-appeal-avenue-for-unhappy-customers