Chapter 21
Communication and complaints management
21.1
The committee has referred to the many cases where submitters felt that
ASIC simply did not listen to or did not care about their report of alleged
misconduct and expressed extreme disappointment with ASIC's response to their
concerns.
Their complaints about ASIC centred on three broad areas: delays in response or
failing to respond; inadequacy of response; and the tone of the response. In
this chapter, the committee considers the way in which ASIC manages complaints
lodged with it and communicates with retail investors and consumers seeking the
regulator's assistance.
21.2
Paragraph (d) of the inquiry's terms of reference directed the committee
to examine ASIC's performance in relation to its complaints management policies
and practices. The term 'complaint' has been interpreted to include both
misconduct reports, that is when a complaint potentially involves a
contravention of the legislation ASIC administers, and complaints made about
ASIC.
Timeliness
21.3
Delays in responding to requests and poor feedback, including a failure
to keep a complainant informed of progress, were among the numerous concerns
that submitters raised with the committee. Extracts from selected submissions
are provided below to illustrate some of the objections the committee received
about the timeliness of ASIC's handling of misconduct reports:
Unfortunately it is difficult to monitor what progress is
being made, if any, with complaints forwarded to ASIC. Generally, it has been
difficult to get ASIC officers to even acknowledge the receipt of complaints
and to get responses to other matters presented.[1]
* * *
On October 2007 I submitted 3 complaints against the Nab to ASIC.
These complaints were forwarded to ASIC with all the printouts put on discs.
ASIC later informed me that they have recorded the information in its
confidential internal database and will be of assistance to them should they
receive further similar complaints. On the 29th February 2008 I received an
Email from ASIC that (Nab) has advised that the changing of my family's account
type will be looked into and finalised by September 2008. Who is ASIC kidding,
a further 7 months.[2]
* * *
There was no discernible response in my situation from ASIC
until letters were written by Members of Parliament.[3]
* * *
(the following is an extract of a letter to ASIC's
chairman) Furthermore it is obvious your staff do not respond to telephone
calls that are made regarding this subject of systemic problems. I have been
told by your staff members that the call I made was logged on and it would be
replied to in 2 days. Two weeks have passed and still no answer![4]
21.4
The Consumer Credit Legal Centre (NSW) was of the view that:
ASIC needs to respond to consumer complaints in a timely
fashion and, where timeliness is not practical, keep consumers (and their
advocates) informed in some appropriate way.[5]
21.5
Mr Gerard Brody, the chief executive officer of the Consumer Action Law
Centre, informed the committee that his organisation makes around 40 or so
detailed complaints a year to ASIC where it is acting for a client as well as
less detailed complaints of an allegation of misconduct where the consumer is
happy to talk to the regulator directly. The Centre was of the view that
improved communication about complaints would 'encourage ASIC to be more timely
in enforcement actions'. More broadly, this might also be improved with an
enhanced consumer advisory role within ASIC.[6]
21.6
Mr Brody stated that the Centre encouraged regulators to consider 'providing
better and timely feedback to those who make complaints about potential
misconduct'. While he recognised that ASIC had limitations on what it can say
about ongoing investigations, he noted that there was a danger in regulators not
saying anything.
In his view:
It can mean consumers and consumer organisations have reduced
motivation to complain and that evidence that regulators need to take
enforcement action is not forthcoming. We are pleased that ASIC has taken up
this recommendation and is now reporting to consumer organisations about
complaints and progress made.[7]
Clarity in response
21.7
Timeliness was not the only problem. The Commonwealth Ombudsman also
informed the committee that complainants often say that even after ASIC informs
them of its decision, they do not understand why ASIC arrived at its
conclusion. According to the Ombudsman, this was particularly the case when the
decision related to the exercise of ASIC's discretion, such as the discretion
not to investigate a report of misconduct or waive late fees. In this regard,
the Ombudsman noted that it accepted that ASIC was 'best placed to determine
its priorities and what may be in the broader public interest'. Even so, the
Ombudsman observed that complaints received by his office regarding ASIC's decisions
not to investigate reports of misconduct were 'usually resolved only after a
more detailed and better explanation of the decision has been provided'. The
Ombudsman explained:
...where we do investigate a complaint, the remedy provided in
the majority of cases is a further explanation of the decision by ASIC. In
these cases, our investigations typically lead us to conclude that ASIC's
decision was not unreasonable or administratively flawed, but that ASIC's
decision simply required further and better explanation.[8]
21.8
He concluded:
Although ASIC is a specialist independent regulator with
market knowledge and expertise which informs its decision making, the fact that
complaints are usually resolved through ASIC's internal review process or where
ASIC (or this office) provides a better explanation to the complainant suggests
that ASIC could improve the explanations of its decisions in the first
instance.[9]
21.9
The Ombudsman observed that the results of the 2013 ASIC stakeholder survey
suggested that one of ASIC's perceived limitations was that it does not clearly
communicate what it is doing. In the Ombudsman's view, early management of
expectations about what ASIC can or will do and the provision of better
explanations of decisions to complainants should lead to a decrease in the
number of complainants seeking an internal review of decisions by ASIC and of
complaints to the Ombudsman about ASIC. Such improvements would benefit ASIC by
reducing its complaint handling workload, as well as reassuring staff and
complainants that problems have been dealt with in the appropriate manner and have
not been allowed to fester.[10]
Tone of communication
21.10
Many submitters expressed frustration with ASIC's poor communication or
apparent inaction following a report about possible breaches or complaints. One
of the lasting impressions that retail investors were left with from ASIC's
response to their complaint was that ASIC does not care. Ms Anne Lampe, a former
financial journalist and former employee of ASIC's media unit, referred to what
she held to be ASIC's 'consistent failure to adequately protect, seemingly
care, or bother to take action when small investors and self-funded retirees
are stripped of their life savings'.[11]
Making a similar observation, Mr Bill Doherty stated:
The ASIC complaints handling procedure is a total failure. People
do not wish to be told that their Complaint will be added to a data base when
they contact ASIC at their wits end. They do not wish to be advised to get a
lawyer when they are impecunious because of ASIC failings. I personally
referred a complaint about Ariff about 6 mths after ASIC commenced Civil Action
against him and I got the Robotic response yet again.[12]
21.11
Many investors and consumers who wrote to the committee believed that
they had strong evidence of maladministration in lending or misconduct by
advisers or directors but when they contacted ASIC for assistance, it failed to
act on their complaint in any effective way.[13]
A number referred to their disappointment in receiving a 'flick letter' or
generic response, 'scripted or form letter', 'a boilerplate or robotic reply'.[14]
Indeed a number of submissions referred to ASIC's insensitive
or indifferent response to their circumstances. Submitters were particularly
galled,
in the face of financial ruin, by ASIC's advice to seek a lawyer.[15]
In this regard,
one submitter described ASIC's response to his concerns about Storm as:
One of the best bits of advice, that ASIC have to offer, is
for Bank Clients to get themselves a Lawyer, when they know, only too well,
that affected victims have been reduced to being almost penniless by the
deliberately orchestrated plan by Banks to gain control of the life savings of
victims.[16]
Other concerns
21.12
Submitters also expressed frustration about the effort involved in
preparing their complaint, compiling supporting documentation and answering
queries from ASIC, all to no avail. In its ultimate response to a complaint
from Mr Trevor Eriksson, ASIC wrote that it had limited powers in relation to
commercial lending contracts and that ASIC did not generally intervene in
private commercial disputes. Mr Eriksson advised, however, that when he
initially discussed his complaint with ASIC officers, they were enthusiastic
about investigating the matter and suggested that there could be
contraventions. Ultimately, in the face of ASIC's apparent loss of interest,
Mr Eriksson argued that 'ASIC should not have misled the writers of complaint;
they should have known that they did not have the power to investigate and said
so upfront'.[17]
ASIC's approach to investigating complaints from individuals, and how this is
reflected in ASIC's 'no further action' letters, was also objected to in other
submissions:
(the following is an extract of a 2010 letter to ASIC's then
chairman) ...ASIC is neglecting its responsibilities under s.12 of its Act
for business to business unconscionability in financial services. Worse, it is
persistently turning away supplicants whose complaints should be taken
seriously. Frankly, it is difficult to take seriously the claims in some
letters in response from ASIC staff that the complainant's case has been
properly examined.[18]
* * *
On April 15th 2013, a response to my complaint was written
and signed by Warren Day, Senior Executive Leader Stakeholder Services. I
appreciate that some investigation was made regarding some my allegations.
However, there was no effort to contact me in order to clarify matters. As a
result, there is considerable presumption in their response. For instance, they
presumed that the matter regarding the bank providing a loan based on 'house
and land' value yet selling our property 'for land value only' on the grounds
that the house was 'illegal', had been dealt with in court. If they had
bothered to contact me, I could have explained that this was impossible as the
hearings were all held before the bank sold our property. Of course, if they
had thought about it, common sense would have brought them to that conclusion
all by themselves.
ASIC pointed out that a few of my complaints can only be
dealt with through other avenues, and I accept that. However, they are
completely wrong in some of their other responses. The overall result is that
though the letter appears to address my complaints, by the end of it, ASIC have
successfully deflected every bit of responsibility toward any of the issues.[19]
* * *
I am not directly involved in a tangle with ASIC. The extent
of my experience concerns the extreme time and energy I have put in trying to
stop a friend from committing suicide...He turned to ASIC for help and was
summarily dismissed. For whatever reason, ASIC was not interested in his case,
giving him the impression that the sum involved was too low for ASIC to
investigate. He was devastated by their response.[20]
21.13
Submitters objected to receiving unsigned replies from ASIC.[21]
One submitter advised that after receiving such a letter they were unable to
contact anyone to discuss the matter further:
I later got a letter from ASIC with no name at the bottom and
signed "Misconduct and Breach Reporting". When I called the phone
number provided I was then repeatedly told no one knows anything about this
matter.[22]
21.14
One aggrieved individual concluded that the aim of ASIC's complaints
processes 'seems to be to let the dissatisfied victim—who has had little help
in actually seeing justice done—let off some steam and then be left to pick up
the pieces of their shattered life while ASIC neatly files the complaint'.[23]
Standards for handling misconduct reports and complaints
21.15
It is clear that ASIC receives a substantial volume of queries, complaints
and misconduct reports. In 2012–13, ASIC's client contact centre received over
700,000 telephone calls. ASIC's annual report for that year notes that over
80 per cent of calls were answered on the spot with the remainder referred
to specialist staff.[24]
Also in 2012–13, ASIC received and assessed 11,682 reports of alleged
misconduct, 11,320 statutory reports and 1,214 breach reports.[25]
21.16
ASIC governs its complaints handling processes by a service charter.
The charter sets targets for ASIC to provide various services or undertake
certain functions. Table 21.1 summarises the service charter targets and ASIC's
results in 2012–13 against these targets
Table 21.1: ASIC's service charter
results, 2012–13
Service
|
Service target
|
2012–13 performance
|
General telephone queries
|
ASIC aims to answer telephone queries on the spot
|
Of telephone queries handled directly by the contact
centre (716,382), 80.5% (576,513) were answered on the spot and 19.5%
(139,869) were referred to specialist staff
|
General email queries
|
ASIC aims to reply to email queries within two
business days
|
77% (111,399 of 144,204)
|
General correspondence about the public database and
registers (including fee waivers)
|
ASIC aims to acknowledge receipt within 14 days of
receiving it, with full response within 28 days
|
85% (17,387 of 20,478)
|
Registering a company
|
ASIC aims to complete company registrations within
one business day
|
98% (200,326 of 204,035)
|
Updating company information and status
|
ASIC aims to enter critical changes to company
information in the corporate register within two business days
|
98% (995,676 of 1,013,048)
|
Registering as an auditor
|
ASIC aims to decide whether to register an auditor
within 28 days of receiving a complete application
|
92% (123 individual applications and
16 authorised audit companies)
|
Registering as a liquidator
|
ASIC aims to decide whether to register a liquidator
or official liquidator within 28 days
|
100% of liquidator applications (37 of
37 applications) and 98% for official liquidators (44 of 45
applications)
|
Applying for or varying an AFS licence
|
ASIC aims to decide whether to grant or vary an AFS
licence within 28 days
|
79% of licences granted within 28 days (374 of
472 applications)
83% of licence variations decided in 28 days (649 of
784 applications
|
Registering a managed investment scheme
|
By law ASIC must register a managed investment
scheme within 14 days of receiving a complete application
|
100% (205 of 205)
|
Applying for or varying a credit licence
|
ASIC aims to decide whether to grant or vary a
credit licence within 28 days
|
83% of licence applications (313 of 375) and
91% of licence variations
|
Applying for relief
|
For applications for relief from the Corporations
Act that do not raise new policy issues, ASIC aims to give an in‑principle
decision within 21 days of receiving all necessary information
|
71% of in-principle decisions (1,935 of 2,744
applications)
|
Complaints about misconduct by a company or
individual
|
For reports alleging misconduct by a company or an
individual, ASIC aims to respond within 28 days of receiving all relevant
information (target: 70%)
|
76% (8,828 of 11,682)
|
Source:
ASIC, Submission 45.2, pp. 71–72.
21.17
Although ASIC has set a target for responding to general correspondence
about its public database and registers and misconduct reports, ASIC does not
have a target set for responding to other general correspondence. ASIC's
service charter provides the following explanation:
For other general correspondence, the exact timing and
content of our response will depend on each case and the request.
In some cases, it may not be appropriate for us to fully
respond to correspondence, or be reasonable to expect us to do so. For example,
correspondence about surveillance, investigations and enforcement may involve
sensitive and highly confidential matters that will restrict what we can say,
or prevent us from replying at all.[26]
21.18
The committee compared ASIC's approach to those adopted by other
regulators and law enforcement agencies. The ACCC's service charter states that
it aims to respond within 15 business days of receipt to letters or webforms
that request a response.[27]
APRA aims to reply to email queries from members of the public within two
business days and all other correspondence within 15 business days.[28] The UK Financial Conduct Authority (FCA) aims to provide a substantive
response to correspondence received from consumers and firms within 12 business
days of receipt, for which it has set a target of 90 per cent. During the
period 1 October 2012 to 31 March 2013, the FCA responded to 96.1 per cent of
consumer correspondence and 94.1 per cent of correspondence from firms within
the 12 business day timeframe.[29]
The service charter of the AFP does not include timeframe targets, noting that
the 'nature of investigating criminal activity makes it difficult to provide
specific timeframes for completion of the investigations that we undertake'.
However, the AFP does commit to advising relevant parties of the progress of
investigations at 'reasonable intervals', except where the investigation may be
jeopardised by doing so.[30]
21.19
The Commonwealth Ombudsman informed the committee that complainants
often report long delays when waiting for a response from ASIC about their
complaint, which can 'be a source of frustration, especially when delay results
in lost revenue'. The Ombudsman's Better Practice Guide to Complaint
Handling states that once a complaint has been made to an agency, the
complaint should be resolved as quickly as possible in order to prevent
irritation or fatigue which 'can thwart successful complaint handling'.[31]
21.20
Service charters and quantifiable performance benchmarks are useful, but
care should be taken in analysing the results. Further, some individuals who
have interacted with ASIC expressed suspicion about how the performance targets
could be met:
The email inquiry response service is useless for anything
that is not 'routine'. My experience is to receive an automated response
notification. Then, if I am very lucky, a proforma response weeks later.
Invariably, that second response does not address the issue, or may promise
that another area or officer will follow-up. In reality, that proforma response
is sufficient for ASIC to mark the enquiry as concluded. Needless to say any
promised follow-up does not materialise.[32]
Assessment of ASIC's processes
21.21
In assessing ASIC's performance at managing misconduct reports and
complaints, the committee has paid particular regard to the evidence from ASIC
and the Commonwealth Ombudsman.
ASIC's response
21.22
ASIC advised that although it has 'a good record' of meeting its service
charter targets, it has been 'making continual efforts to improve the way we
handle reports of misconduct and our communication with persons who have made a
report'.[33]
ASIC has recently been publishing additional information about how it assesses
complaints—in October 2012 and July 2013 ASIC released a number of information
sheets on how it approaches commonly reported matters.[34]
In its main submission, ASIC reported that over the past two years it has
developed a 'customer engagement framework'. Key aspects of the framework
include a protocol for handling reports of misconduct, clear communication
objectives as the report of misconduct is handled and efforts to provide clear
information about reporting misconduct on ASIC's website.[35]
Under the customer engagement framework:
-
personal telephone contact (or two attempts) is now made with the
person who lodged the report of misconduct to ASIC within three business days
of receipt for all reports (except for market matters, which are responded to
immediately due to the sensitivities of the matters raised in these reports of
misconduct);
-
two new report-handling streams have been developed, as follows:
-
'rapid handling'—for matters outside of ASIC's jurisdiction or
are appropriate for rapid resolution by way of a telephone call and targeted
information; and
-
'expedited communication'—for matters within ASIC's jurisdiction
and which ASIC will collect information on, but where ASIC cannot directly
resolve the person's particular concerns;
-
the 'how to complain' section on ASIC's website has been
redesigned; and
-
customer service principles have been adopted for the handling of
reports of misconduct.[36]
21.23
Mr Medcraft informed the committee that ASIC had taken significant steps
to improve transparency and communication. He acknowledged, however, that despite
all its efforts, ASIC officers have heard the clear message from the
submissions—'we need to communicate more and we need to communicate more
effectively about our work and our decisions'. He stated that this was 'an
ongoing goal of the commission'.[37]
21.24
It is also necessary to acknowledge another aspect of complaints
handling. Government agencies such as ASIC are often contacted by distressed individuals
who have few options for having the wrong, or perceived wrong, that they have
suffered remedied. Guidance published by the Commonwealth Ombudsman observes
that these complainants can exhibit unreasonable behaviour and be unwilling to
accept decisions taken about their complaint. They can present employees with
various difficulties:
These complainants often tend to be angry, aggressive and
abusive to staff members. They threaten harm, they are dishonest or
intentionally misleading in presenting the facts, or they deliberately withhold
relevant information. They flood agency offices with unnecessary telephone
calls, emails and large amounts of irrelevant printed material. These
complainants tend to insist on outcomes that are clearly not possible or
appropriate, or demand things they are not entitled to. At the end of the
process they are often unwilling to accept decisions and continue to demand
further action on their complaint.[38]
21.25
The committee is aware of cases where ASIC is required to deal with
individuals that have unrealistic expectations either about what ASIC can do or
the degree of access that they should have to ASIC employees. Further, there is
clearly scope for aggrieved individuals to take up a disproportionate amount of
ASIC's resources.[39]
Evidence from the Commonwealth
Ombudsman
21.26
The Commonwealth Ombudsman advised that in 2012–13 it received
338 complaints about ASIC (representing 1.9 per cent of the total
complaints received by the Ombudsman). By contrast, the Ombudsman received 55
complaints about the Australian Financial Security Authority, 35 complaints
about the Australian Communications and Media Authority and 17 complaints about
the ACCC.[40]
21.27
The largest category of complaints received about ASIC in 2012–13
related to problems associated with the implementation of the new business
names register.
The Ombudsman advised that the remaining main areas of complaint about ASIC
related to ASIC's discretionary decision to investigate a report of misconduct;
ASIC's decision to not waive late fees; and accessibility, including
difficulties making contact with ASIC, delays in receiving a response, and the
usability of ASIC's online services.[41]
Another issue commonly raised in complaints is that there is uncertainty about
how to complain to ASIC about ASIC:
While ASIC's website contains a clear heading, "how to
complain", the subsequent list of links does not offer a clear and
explicit opportunity to make a complaint about ASIC.[42]
21.28
The Commonwealth Ombudsman, Mr Colin Neave AM, told the committee that
ASIC has taken steps to improve its website and is working to increase the
capacity of its call centre. However, he considers that there are further ways that
ASIC could improve, including by simplifying the complaints process and making
it more accessible, particularly by delineating the process for complaining
about ASIC from misconduct reporting. Mr Neave noted that his office had been
engaging with ASIC about these issues and that 'overall ASIC has been
responsive and cooperative'.[43]
21.29
The Ombudsman's Better Practice Guide to Complaint Handling
suggests that when a decision has been made regarding a complaint, an
explanation of the decision should be presented in a style the complainant can
understand and should deal with each concern raised by the complaint.[44]
Further, Mr Neave suggested that handling complaints only in writing 'is not
always the best way' and that consideration should be given to explaining the
organisation's decision orally as well as in writing:
...when someone is terribly upset about something having gone
wrong, if the letter does not deal with reasonable precision with the elements
of the complaint, that only makes it a lot worse for the institution, whether
it is a private sector institution or ASIC itself. There are all sorts of
reasons why this cannot happen. There might be some duty of confidentiality,
there might be some privacy problems or there might be some other issue, but my
recommendation to any organisation which is dealing with complaints is: if you
get a chance to sit down with the person who is making the complaint and talk
it through with them, the whole communication dynamic changes quite
significantly.[45]
21.30
Mr Neave was asked whether consideration should be given to conducting
an external audit of ASIC's complaints-handing processes. In his view, recent
initiatives following the problems associated with the business names register
have improved ASIC's capacities and processes. Mr Neave provided the following
testimony:
I think the progress which has been made recently, which we
have been heavily involved with ourselves, has led to a point where it seems to
be working quite well, but it is certainly something that we will be keeping a
watchful eye on. When the business name issue arose, that is when the office
became very interested in ASIC. We have been having meetings every couple of
months with them ever since then in order to work on improving the
complaint-handling processes. As I said before, we are also doing—and this goes
across Commonwealth agencies and departments—doing surveys and investigation.
There will be some recommendations coming out of that which I think will assist
not just ASIC but all Commonwealth departments and agencies. There is quite a
deal of work going on.[46]
Committee view
21.31
The committee has received a significant number of submissions from
individuals aggrieved by how ASIC managed their report of misconduct. There are
examples where such reports were handled poorly, or could have been handled
better. The committee does, however, recognise that it is only likely to be
contacted by individuals who consider that their complaint did not receive
sufficient attention or was otherwise not handled appropriately, not those
satisfied with ASIC's performance in this area. Further, the committee
acknowledges that, at times, ASIC also has to deal with unreasonable complainants.
21.32
Nevertheless, the committee does consider that ASIC needs to improve how
it manages misconduct reports and complaints. In particular, ASIC must strive
to be more responsive and sensitive to the concerns of consumers and retail
investors, while adequately managing expectations about what it can do. The
committee considers that ASIC should review how it manages and responds to
misconduct reports from members of the public, particularly those from
vulnerable and disadvantaged consumers.
Recommendation 38
21.33
The committee recommends that ASIC undertake an internal review of the
way in which it manages complaints from retail investors and consumers with the
aim of developing training and professional development courses designed to:
-
have ASIC officers more attuned to the needs of vulnerable and
disadvantaged consumers and to enhance ASIC's consumer advisory role;
-
devise strategies and protocols for responding to retail
investors and consumers registering a complaint, many of whom are at their wits
end and in desperate need of help;
-
ensure that ASIC officers, when advising a consumer to transfer
their complaint to the relevant external dispute resolution scheme, make that
transfer as seamless and worry-free as possible while conveying the sense that
ASIC is not discarding their complaint; and
-
acknowledge the advantages of making a return call to the
complainant and provide guidance for ASIC officers on the times when making a
return call would be appropriate.
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