ASIC research highlights need for improved consumer complaints experience

ASIC has released research exploring the consumer experience of internal dispute resolution (IDR) procedures across the financial services sector.

The research sought to better understand the experience of people thinking about or making a complaint to a financial services firm. The research revealed the incidence of complaints across the financial services sector, as well as the barriers and difficulties people face in approaching and navigating the complaints process.

ASIC Commissioner Danielle Press said, “As the first step in the financial dispute resolution system, IDR plays a vitally important role in Australia’s consumer protection framework.

“Consumers and small businesses should have access to transparent, fair and timely complaints processes. 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 that there are clear opportunities for financial services firms to improve consumer experience and outcomes.”

Key findings of the research were:

  • 17 per cent of Australians aged 18+ considered making a complaint to a financial firm in the preceding 12 months (‘the considerers’)
  • 8 per cent went on to make a complaint (‘the complainants’)
  • almost half of those who did not make a complaint reported that they did not think it would make a difference or it was not worth their time, and
  • 18 per cent of complainants dropped out or withdrew their complaint before it was concluded.

Common obstacles that were encountered by complainants that directly affected their satisfaction and/or confidence in the complaints process include:

  • Structural obstacles: one in seven complainants found it difficult to find the firm’s contact details to make a complaint
  • Transparency obstacles: Almost a quarter of complainants did not have the IDR process explained well at first contact and 27% of complainants were unsure of how long they would need to wait for a decision, and
  • Customer service obstacles: 28 per cent of complainants reported feeling that they had not been listened to or heard and 22% felt they had been passed around to too many people or strung along.

Only 45 per cent of complainants who received an unfavourable outcome received an explanation of the decision made against them by the firm and only 21% of complainants whose complaints were not resolved in the timeframe set by ASIC guidance had the external dispute resolution (EDR) process explained to them.

ASIC has expressed concerns about this finding since each of these steps is essential to assist consumers to effectively escalate their complaint to an independent and external forum. Since 1 November 2018, this forum has been the Australian Financial Complaints Authority (AFCA).

The release of this research is the first step in a coordinated body of work that ASIC is undertaking to raise financial services IDR standards and transparency.