“Happy New Year” – IDR data reporting period starts from 1 January 2023

2023 welcomes in a financial firm’s obligation to report to ASIC specified information about its internal dispute resolution (IDR) system, processes and outcomes.

For most financial firms, it will be their first reporting period where they will have to submit a report to ASIC. The report will involve complaints made in the reporting period 1 January 2023 to 30 June 2023. For this initial reporting period the data report will need to be lodged with ASIC by 31 August 2023. After that, firms must report the specified IDR data to ASIC every 6 months, by the end of July and January each calendar year (the reporting periods close on 30 June and 31 December).

Failure to comply with ASIC’s IDR data reporting requirements may have serious consequences.

Which financial firms must report IDR data to ASIC?

Firms that are required to report include:

• AFSL holders (but only if the financial services are provided to persons as retail clients);

• unlicensed product issuers and unlicensed secondary sellers;

• superannuation trustees; and

• credit licensees.

Initial reporting deadline for initial cohort

In March 2022, a group of 11 large financial firms (initial cohort) were chosen to lodge their first IDR data for the reporting period 1 July 2022 to 31 December 2022. The initial cohort must lodge the data with ASIC by 28 February 2023. There is no requirement for entities outside the initial cohort to lodge data for this reporting period.

Initial reporting deadline for all other financial firms

All other financial firms (those not in the initial cohort) must lodge their initial IDR reporting data for the reporting period 1 January 2023 to 30 June 2023. The deadline for all financial firms (including the initial cohort) to lodge data for this reporting period is 31 August 2023.

Ongoing reporting deadlines for all financial firms

A reporting period is defined as a period of 6 months ending on:

• 30 June (i.e., 1 January to 30 June each calendar year); and

• 31 December (i.e., 1 July to 31 December each calendar year).

For the initial reporting periods, ASIC has allowed financial firms 2 months after the end of the reporting period to file their data, to enable the financial firm to become familiar with the processes. For all other reporting periods, the financial firm must lodge their IDR data with ASIC by the end of the following calendar month. For example:

What complaints need to be included in an IDR data report?

The IDR data submitted to ASIC must include specified data in relation to each complaint made to the financial firm that is required to covered by the financial firm’s IDR process and was either

• made in the reporting period; or

• made after the start of the financial firm’s initial reporting period and was not closed as at the start of the reporting period.

Complaints which were received before the beginning of the financial firm’s initial reporting period do not need to be included in the IDR report.  For most financial firms this means that complaints received prior to 1 January 2023 do not need to be reported to ASIC.

Example: A complaint was made to a credit provider about the miscalculation of interest on a personal loan provided to a retail consumer. The credit provider’s initial reporting period commenced on 1 January 2023. The table below shows the various outcomes depending on the date the complaint was received and the date that the complaint closed:

**A complaint is defined as closed once the financial firm has either:

• provided an IDR response to the complainant;

• resolved the complaint to the complainant’s satisfaction; or

• given the complainant an explanation or apology where no further action can reasonably address the complaint.

What are the contents and format for IDR reports?

In March 2022, ASIC released the mandatory requirements for the IDR data framework and an IDR data reporting handbook.

It is important to read this information in conjunction with RG 271 which sets out what a financial firm must do to have an IDR system which meets ASIC’s standards and requirements, including an effective system of recording data and keeping track of complaints.

The IDR data reporting handbook deals with the mandatory IDR data reporting obligations and how financial firms must collate their IDR data and submit it to ASIC. The handbook also supplies information on:

• the data reporting process;

• the IDR data dictionary, which describes the data elements financial firms must report on;

• the IDR data glossary, which defines terminology used in the data dictionary; and

• step-by-step instructions on how to submit IDR data to ASIC via the ASIC Regulatory Portal.

Firms will need to be familiar with the requirements, formatting and codes for each data element within the framework so that the firm’s IDR report meets the requirements for report lodging. For example, to successfully submit an IDR report, it must pass two stages of validation before being accepted by the system. Until a report has passed both of ASIC’s validation checks it will not be deemed to have been lodged.

In addition to the handbook, other useful resources from ASIC are:

• IDR Data Reporting Excel template

• IDR Validation Rules examples

• Submission checklist in appendix 3 to the handbook

• ASIC FAQs on reporting IDR data on the ASIC Regulatory Portal

IDR reporting for multiple licence holders

Where a firm holds multiple licences, for example, an AFSL and an ACL, the firm can submit a consolidated report to ASIC each reporting period.

IDR information published by ASIC

ASIC may publish information relating to IDR based on information provided in the IDR data reports.  The publication of information can relate to a particular entity or may be information from which a particular entity can be identified, giving ASIC the ability to “name and shame” entities which it considers to be IDR under-performers. However, ASIC cannot publish information which is personal information within the meaning of the Privacy Act 1988 (Cth).

ASIC says it will begin publishing IDR data after 31 August 2023 when all entities have commenced reporting. ASIC’s first report will cover all complaints received by firms during the period from 1 January 2023 to 30 June 2023.  ASIC intends to release a consultation paper on its approach to publishing IDR data in the coming months.

What to do now

It may seem some time off, but 31 August 2023 will come around sooner than we think. Given that the reporting period commences at the beginning of January 2023, if there are any information gaps, it’s important to deal with them sooner rather than later.  We suggest some action points as follows:

• Check that the firm’s IDR process meets the standards and requirements in RG 271. We can assist with this process, and we offer a fixed price compliance assurance review against the standards and requirements for small, medium and larger clients.

• IDR processes reflecting ASIC’s IDR standards and requirements have been operating for over a year now. If not done already, it may be a good opportunity to conduct a review or assurance check to ensure that the IDR processes and procedures are working efficiently, and to identify any areas of improvement.  This may be particularly important for licensees with numerous authorised representatives or credit representatives. Again, we can assist with this process, and we offer a fixed price compliance assurance review for small, medium and larger clients.

• Ensure that the system is capturing all relevant information in the format needed to report to ASIC. You may need to involve your IT department/resources in this exercise.

• Conduct refresher training for frontline and other staff about the firm’s IDR policy, processes and systems to ensure that complaints are being properly identified, dealt with and recorded. We can assist with training, or providing training materials for you to use within your organisation.

Kathleen Harris and Patrick Dwyer
Legal Directors