Legal advice: Dealing with client complaints

Australian Financial Services Licensees (AFSLs) must now acknowledge all client complaints immediately and resolve problems in prescribed time frames, under recent changes to the Australian Securities and Investments Commission’s Regulatory Guide 165 (RG165).

In order to comply with the new requirements, AFSLs must adjust their current internal dispute resolution system for clients.

The regulator has always expected complaints to be dealt with “genuinely, promptly, fairly and consistently” however the timeframes for dealing with complaints have been tightened to encourage licensees to act with a sense of urgency.

Licensees can’t be complacent about their current dispute resolution system. Key changes now require a written acknowledgement of the client’s complaint be sent as soon as it is received. Licensees can no longer wait 24-48 hours to acknowledge the complaint, it must be immediate. Licensees also cannot force the client to put a complaint in writing. If the current system does not comply with these requirements, the system has to be changed.

If the complaint can be resolved within five business days of initial receipt, there is no need for full assessment and investigation except for hardship claims, declined insurance claims or disputes about the value of an insurance claim.

The outcome and decision must be delivered to the client within 45 days of the initial complaint.

Licensees cannot extend this to take account of new information or information they can’t collect from the client, but they do have 90 days to respond to superannuation or traditional trustee services complaints.

If licensees are unable to give a final response within the 45-day period, the client must be told the reasons for the delay and must be directed to an external dispute resolution scheme.

All licensees should check their Complaints Procedures to ensure the tighter new timeframes are incorporated in it and review their complaints handling processes to ensure the timeframes can be met. An inadequate internal complaints system is a license breach.

The Fold’s AFS Licensee Manual contains a fully compliant complaints resolution process for small to medium sized licensees.

Charmian Holmes is solicitor director of The Fold Legal.