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ASIC review of financial services EDR schemes

ASIC has released Consultation Paper 102: Dispute Resolution ? update of RG 139 & RG 165 proposing improvements to the way financial services businesses resolve disputes with consumers, including harmonisation of the different schemes.

Under s 912A of the Corporations Act , financial services businesses that do business with retail clients are required to have a dispute resolution system that consists of an internal dispute resolution process and membership of one or more external dispute resolution schemes approved by ASIC.

A key proposal of ASIC?s is to replace monetary limits with a cap on compensation that can be awarded by an external dispute resolution scheme approved by ASIC (EDR scheme) and to increase the compensation amount to $280,000.

This would mean that some schemes would need to lift their current limits within an appropriate transitional period.

The review also reflects the introduction of a new Australian Standard on complaints handling (AS ISO 10002). The AS ISO 10002 2006 definition of "complaint" will be adopted:

An expression of dissatisfaction made to an organisation, related to its
products or services, or the complaints handling process itself, where a
response or resolution is explicitly or implicitly expected.

Subscribers to the Electronic Funds Transfer Code of Conduct (EFT Code) will also be required to comply with AS ISO 10002 (in an upcoming review of the EFT Code).

ASIC also proposes to require financial services providers to provide a final response to complaints within a maximum of 45 days, but within 30 days if possible.

The closing date for submissions is 7 November 2008.

Full post as published by Australian Regulatory Compliance Review on September 08, 2008 (boomark / email).