In 2024, ASIC reviewed 11 general insurers to understand how they are supporting customers who make a complaint. ASIC’s review focused on how general insurers are complying with select enforceable obligations in Regulatory Guide 271 Internal dispute resolution (RG 271). While ASIC’s review focused on general insurers, the findings in this report are relevant for all financial firms that must comply with RG 271, this includes Underwriting Agencies, Claim Managers (TPAs), Claimant Intermediaries and Insurance Brokers.
ASIC‘s key findings included:
- Insurers failed to identify 1 in 6 customer complaints
- Insurers only identified 85 systemic issues from over 1.4 million complaints
- Insurers had immature systems for handling complaints and reporting on complaints
- 1 in 8 IDR responses for rejected complaints did not meet mandatory content requirements
- 1 in 5 delay notifications failed to meet mandatory content requirements
- All insurers failed to provide delay notifications within required timeframes
The General Insurance Code Governance Committee highlighted complaints handling as a main priority for 2025-26.
Respondents to our consultation raised significant concerns about how insurers identify and handle complaints. We raised our own concerns about the handling of complaints in our Industry Data and Compliance Report FY24, with the number of complaints increasing by 18%.
The Insurance Brokers Code Compliance Committee in their Annual Report 2024-25 found 42% of brokers reported no breaches or complaints (that) suggests continued underreporting and issues with internal monitoring… These failures represent service gaps that can expose clients to risk.
Regulatory requirements
AFS Licensees, as part of their general obligations (refer s912A(1)(g) and (2) Corporations Act) must have a dispute resolution system that consists of:
- an internal dispute resolution (IDR) procedure that complies with the enforceable paragraphs of RG 271;
- covers complaints against the licensee (and representatives) in connection with the provision of the financial services; and
- be a member of AFCA.
All AFS Licensees that provide financial services to retail clients must submit an IDR report to ASIC.
Firms must submit an IDR report to ASIC every six months. The reporting periods are:
- 1 January to 30 June, and
- 1 July to 31 December.
A two-month submission window opens at the end of each reporting period. Submission windows are:
- 1 January to end of February, and,
- 1 July to 31 August.
Financial firms that had complaints during the relevant six-month reporting period must submit an IDR report through ASIC’s Regulatory Portal that contains an IDR data file in machine-readable format, consistent with the specifications in the IDR data reporting handbook.
In a recent media release, ASIC has confirmed that it will proceed with plans to publish IDR data at firm-level. The IDR dashboard will be published later this year.
Code Complaint requirements
Part 11 of The GI Code of Practice applies to Retail Insurance products. In addition, it is available to an uninsured person making a claim against a customer who is insured under a Retail Insurance policy (see paragraph 60). Part 11 also applies to Wholesale Insurance products where you are entitled to Financial Hardship support under paragraph 107(b).
Part 9.0 of the Insurance Brokers Code of Practicerequires If a client, prospective client, named beneficiary, or another party interacting with a Code Subscriber while performing services for their client is unhappy about the provision of Covered Services or their interactions and dealings with a Code Subscriber, they should make a complaint (see Definitions).
Both Codes adopt the legal definition of a complaint (refer RG 271.27).
Commentary
It is clear that complaints will continue to be subject to Regulatory and Code scrutiny throughout 2025-26
Key areas of improvement based on my practical experience include:
- a firm’s IDR procedures must ensure that the customers voice is genuinely being heard internally, even when they are not present;
- ensure that customer service and claims staff are trained to identify and raise complaints, and if in doubt, are encouraged to ask the customer if they would like to lodge a complaint and if so, provide assistance;
- provide frontline staff with the training, tools and authority to resolve complaints at the first point of contact;
- frontline staff must demonstrate empathy and compassion (be human) but can’t afford to take complaints personally – the customer does not know you as a person;
- be alert to customers experiencing vulnerability;
- adopt a conservative view of what constitutes a complaint;
- all frontline staff must make contemporaneous and comprehensive file notes;
- be more focused on procedural fairness rather than the outcome of a complaint. The process will deliver a fair and balanced outcome;
- following each complaint, the team member should turn their mind to whether the cause of an individual complaint has the potential to be a systemic issue and if so, report it as such;
- Monitoring programs must include identifying complaint systemic issues;
- start with a position that what the customer is telling me is 100% correct and allow the evidence to prove otherwise;
- dedicated IDR teams must assign an objective weighting factor to the relevance and importance of each piece of evidence;
- IDR teams must act independently and subject internal people, service suppliers including experts and their reports to the same rigour that they subject the customers evidence to;
- IDR teams must adopt AFCA Approaches and pay less attention to individual published AFCA determinations;
- IDR teams must refrain from joining the dots for internal evidence. It is not the role of an IDR team to build the firm’s case;
- The right to complain is a fundamental customer right, the firm’s only obligation is to make the customer aware of that right;
- Brokers must ensure (at triage) that the clients complaint is not about any or part of the financial services provided by the broker, before acting as the clients complaint advocate against the insurer;
- in respect of an underwriting agency, acting under a binder with an insurer and providing the financial services under the agency’s AFSL (including claims handling and settling), any complaint is always against the underwriting agencies AFSL. Where the complaint is passed to the APRA regulated insurer or Lloyds Australia to manage, they do so as an outsourced provider and the agency retains accountability for the complaint under their licence;
- automation and human touches (including training) should be blended to ensure compliant complaint outcomes; and
- all firms should have an independent annual review conducted of their complaints procedurest to ensure ongoing compliance and that the complaint procedures genuinely ensure that the custoemrs voice is being heard, internally.
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