The corporate regulator will continue to monitor client remediation but has outlined in updated guidance how the industry should oversee its own remediation programs.
The regulator released the 94-page RG277: Consumer remediation as well as an 18-page supporting document Making it right: How to run a consumer-centred remediation on Tuesday morning.
ASIC deputy chair Karen Chester said the guidance puts the onus on the industry to pursue fair and timely remediations.
“To date ASIC has needed to oversee large scale remediations to ensure affected consumers were treated fairly and received the compensation they were entitled to,” she said.
It cited remediation for fees for no service or non-compliant advice, as well remediation from the insurance industry for mis-selling junk insurance as projects it oversaw. So far, fees for no service have seen payments of $3.6 billion to 1.4 million consumers.
“Licensees must also do better at identifying and remediating problems earlier to avoid the costly lag and drag of remediation,” Chester said.
Finding the right approach
The documents outline best practice for consumer driven outcomes, including how to handle communications with consumers during the remediation process, including non-responsive consumers.
The guidance recommended avoiding a one-size-fits-all approach to client communication, as well as avoiding unnecessary or excessive correspondence.
“There should be limited circumstances in which there is a ‘call to action’ and the consumer is asked to do something.”
Additionally, ASIC touted the benefits of using a soft launch for remediation programs because it causes minimal delays to the process as a whole and created a refined process.
“[The test program] should help refine the remediation, identify issues and reduce the likelihood of needing to re-do parts of the remediation in the future, saving you money in the long term,” the guidance stated.
‘Trifecta of failure’
Chester said the main stumbling blocks for remediation programs has been underinvestment in those systems, which leads to a “trifecta of failures”.
“First and foremost, in delivering on promises to consumers, second in identifying the failures and third in being able to remediate consumer loss in a timely way.”
Chester said the release of expanded guidance should allow licensees all necessary details needed to achieve remediation outcomes without ASIC’s direct help.
“Going forward, while ASIC may need to intervene in some isolated cases, we cannot and should not oversee remediations in order for consumers to receive fair and timely outcomes,” Chester said.
ASIC stated $5.6 billion has been paid to seven million Australians over the last six years with another $1.6 billion to be paid 2.7 million clients.
