IDR reforms – new mandatory requirements commencing October 2021

On 30 July 2020 ASIC released its updated requirements for financial firms dealing with consumer and small business complaints under internal dispute resolution (‘IDR’) procedures. The new requirements will apply from 5 October 2021.

The requirements are set out in a new Regulatory Guide 271 Internal dispute resolution (‘RG 271’). RG 271 includes some provisions which are enforceable (i.e. mandatory). They have been made enforceable by a legislative instrument issued by ASIC, the ASIC Corporations, Credit and Superannuation (Internal Dispute Resolution) Instrument 2020/98 made on 30 July 2020.

RG 271 will replace ASIC’s existing regulatory guide on dispute resolution (RG 165) on 5 October 2021. The enforceable IDR requirements will then apply to complaints received on or after that date.

In this article we summarise the mandatory elements of RG 271, to assist financial firms prepare for the new regime.

What is a complaint?

RG 271 adopts the definition of a complaint set out in AS/NZS 10002:2014.

[An expression] of dissatisfaction made to or about an organization, related to its products, services, staff or the handling of a complaint, where a response or resolution is explicitly or implicitly expected or legally required.

RG 271 requires that a financial firm must deal with expressions of dissatisfaction that satisfy this definition under its IDR process (RG 271.28).

ASIC says that the following expressions of dissatisfaction are complaints (RG 271.32):

  • posts (that meet the definition of ‘complaint’) on a social media channel or account owned or controlled by the financial firm that is the subject of the post, where the author is both identifiable and contactable;
  • an objection to a proposed decision about how and to whom to pay a superannuation death benefit distribution;
  • complaints about a matter that is the subject of an existing remediation program or about the remediation program itself (e.g. delays, lack of communication); and
  • complaints about the handling of an insurance claim (e.g. excessive delays or unreasonable information requests).

This is not an exhaustive list.

Some kinds of complaints

RG 271 includes some special provisions about certain kinds of complaints.

  • Social media: The reference to complaints on social media in RG 271 is a point of difference from RG 165, which does not deal with this area. Social media posts on channels or accounts which are not owned or controlled by the financial firm are not considered by ASIC to be complaints for the purposes of the mandatory IDR requirements. ASIC says that it does not expect financial firms to seek to identify complaints made on third party social media accounts or channels, and that when responding to a complaint made on social media, a financial firm must ensure consumer privacy is protected. It also requires representatives of financial firms to refer complaints made on social media to their licensee, in the same way that they are required to do for complaints they receive through other channels (RG 271.32).
  • Small business complaints: An IDR process must cover small business complaints. ASIC’s legislative instrument replaces the definition of “small business” in the Corporations Act with the definition set out in the AFCA Rules. The AFCA Rules define a “small business” as a business that had less than 100 employees at the time of the act or omission by the financial firm that gave rise to the complaint. It includes a primary producer, if that primary producer is also a small business (RG 271.37).
  • Traditional trustee complaints: ASIC requires that the IDR process for trustee companies providing traditional services must be able to deal with complaints made by retail clients. These clients include individuals and small businesses who directly engage a trustee company to provide traditional services (e.g. to prepare a will, trust instrument, power of attorney or agency arrangement), or who do not directly engage the services of the trustee company, but who may request an information return (such as beneficiaries of a will) (RG 271.39).
  • Superannuation-related complaints: ASIC has imposed specific requirements for IDR processes for regulated superannuation funds (except for SMSFs), approved deposit funds and RSA providers. At a minimum, their IDR process must be able to deal with complaints made by a superannuation fund member or third-party beneficiary who is eligible to make a complaint to AFCA under s1053 of the Corporations Act, or who is taken to be a member of a regulated superannuation fund or approved deposit fund, or a holder of an RSA, under s1053A of the Corporations Act (RG 271.41). In RG 271, ASIC explains that this means that the IDR process must accept and deal with complaints made by superannuation product holders, beneficiaries with an interest in a death benefit, and parties (and intending parties) to an agreement under the Family Law Act 1975 or order affecting superannuation (RG 271.42).
  • Credit-related complaints: RG 271 requires that the IDR process for credit must be able to handle complaints made about the credit activities engaged in by the credit licensee or its credit representatives. This means complaints made by consumers of credit, lessees and guarantors, as defined in the National Consumer Credit Protection Act (RG 271.43). Small business is not covered by this legislation, but as non-mandatory guidance, ASIC encourages firms to cover small business credit complaints (RG 271.44).


Financial firms that outsource any of their IDR process are required under RG 271 to have measures in place to ensure that due skill and care is taken in choosing suitable service providers, to monitor the ongoing performance of service providers, and to appropriately deal with any actions by service providers that breach service level agreements or fall short of their obligations under RG 271 (RG 271.48).

IDR responses

  • What is an IDR response?: RG 271 sets out the requirements for an IDR response by a financial firm. An ‘IDR response’ is a written communication from a financial firm to the complainant, informing them of the final outcome of their complaint at IDR (either confirmation of actions taken by the firm to fully resolve the complaint or reasons for rejection or partial rejection of the complaint), their right to take the complaint to AFCA if they are not satisfied with the IDR response, and the contact details for AFCA (RG 271.53).
  • Reasons for rejection: ASIC says that if a financial firm rejects or partially rejects the complaint, the IDR response must clearly set out the reasons for the decision by identifying and addressing the issues raised in the complaint, setting out the financial firm’s findings on material questions of fact and referring to the information that supports those findings, and providing enough detail for the complainant to understand the basis of the decision and to be fully informed when deciding whether to escalate the matter to AFCA or another forum (RG 271.54).
  • When an IDR response is not required: A financial firm does not need to provide an IDR response to a complainant if the firm closes the complaint by the end of the fifth business day after receipt because the firm has resolved the complaint to the complainant’s satisfaction, or given the complainant an explanation and/or apology when the firm can take no further action to reasonably address the complaint (RG 271.71). However, a financial firm must provide a written IDR response, even where the complaint is closed by the end of the fifth business day, if the complainant requests a written response, or if the complaint is about hardship, a declined insurance claim, the value of an insurance claim, or a decision of a superannuation trustee (RG 271.75).
  • IDR response timeframes: RG 271 sets out the maximum timeframes which apply for providing an IDR response to various types of complaint:
    • Standard: 30 calendar days after receiving complaint;
    • Traditional trustee complaints: 45 calendar days after receiving complaint;
    • Superannuation trustee complaints (except for complaints about death benefit distributions): 45 calendar days after receiving complaint;
    • Complaints about superannuation death benefits: 90 calendar days after expiry of 28 calendar day period for objecting to a proposed death benefit distribution;
    • Credit-related complaints involving default notices: 21 calendar days after receiving complaint; and
    • Credit-related complaints involving hardship notices or requests to postpone enforcement proceedings: 21 calendar days after receiving complaint, subject to exceptions below. If the credit provider requires additional information, it has 21 calendar days to make a request. The complainant must provide the information within 21 calendar days. The credit provider then has a further 21 calendar days to provide an IDR response. If the credit provider does not receive the requested information with 21 calendar days of its request, it must provide the IDR response within 7 calendar days. If agreement is reached on the complaint, the credit provider must confirm the terms in writing within 30 calendar days.
  • Delays in providing IDR response: Despite the complaint timeframes set out above, RG 271 excuses a financial firm from providing a complainant with an IDR response within the relevant IDR timeframe if there is no reasonable opportunity for the financial firm to provide the IDR response within that timeframe because resolution of the individual complaint is particularly complex, and/or circumstances beyond the financial firm’s control are causing complaint management delays (RG 271.65). Before the relevant maximum IDR timeframe expires, the financial firm must give the complainant an ‘IDR delay notification’ that informs the complainant about the reasons for the delay, their right to complain to AFCA if they are dissatisfied, and the contact details for AFCA (RG 271.66). This exception does not prevent a complainant from exercising their right to escalate a complaint to AFCA, does not affect AFCA’s ability to register a complaint, and does not apply to the refer back timeframes applied by AFCA when a complaint is escalated to AFCA.

Maximum timeframes for traditional trustee complaints

During the 45 calendar day maximum IDR timeframe, RG 271 says that a traditional trustee must:

  • on receiving the complaint, use best endeavours to identify and notify other people who may request an information return (i.e. other beneficiaries) and who may reasonably have an interest in the outcome of the complaint;
  • where relevant to the efficient and fair handling of the complaint at IDR, consider the views of those persons identified; and
  • keep those persons identified informed of the progress of the complaint at key stages of the IDR process, including when the trustee gives an IDR response or IDR delay notification (RG 271.76).

Under the 45 calendar day maximum IDR timeframe, time stops running when:

  • another person commences legal proceedings to be included as a beneficiary and the outcome would affect the handling of the complaint at IDR; or
  • the traditional trustee applies for an opinion, advice or direction from a court to reasonably handle the complaint at IDR (e.g. where the trustee company is acting as a manager or administrator of the trust property) (RG 271.77).

Time starts to run again once the court determines whether the other person should be included as a beneficiary, or provides an opinion, advice or otherwise gives a direction, and the time to lodge an appeal (if relevant) has passed (RG 271.78).

Insurance in superannuation complaints

Complaints may be made to the insurer or the trustee about insurance in superannuation, and trustees, insurers and administrators must have arrangements in place to ensure the maximum IDR response timeframe is complied with. Time starts to run from the date the complaint is first lodged with either one of the parties (RG 271.79).

Any objection to a proposed death benefit distribution is a complaint and triggers the IDR process (RG 271.81). If an objection is made, the 90 calendar day maximum IDR timeframe begins from the end of the 28 calendar day objection period (RG 271.82).

After reviewing any objections, the death benefit decision-maker may either:

  • amend the previous proposed decision and give all potential beneficiaries additional notice that the decision-maker proposes to make a new decision (in which case further objections must be notified to the death benefit decision-maker within 28 calendar days); or
  • amend or maintain the previous proposed decision and give all potential beneficiaries notice that they have made the decision (in which case eligible complainants can make a complaint to AFCA within 28 calendar days) (RG 271.83).

When the death benefit decision-maker gives notice of a new proposed decision in response to an objection they must:

  • provide each complainant with a response that meets the minimum IDR response content requirements, except for the AFCA-related content requirements; and
  • provide any non-complaining beneficiaries with the same information as the complainant, while complying with any obligations under privacy laws (RG 271.84).

When the death benefit decision-maker gives notice that they have made the decision, they must:

  • provide each complainant with a response that meets the minimum IDR response requirements; and
  • provide any non-complaining beneficiaries with the same information as the complainant, while complying with any obligations under privacy laws (RG 271.85).

Complaints involving default notices

If a complaint involves a default notice, the credit provider or lessor must provide an IDR response to the complainant within 21 calendar days (RG 271.86). However, for complaints about hardship notices or requests to postpone enforcement proceedings that the complainant has previously sought and the provider or lessor has rejected or not considered, the complainant may take their complaint directly to AFCA once the timeframes in the National Credit Code have passed.

Examples of a complaint involving a default notice include where the complainant alleges that the default notice was not served, or disputes the amount specified in the default notice or whether the default notice was rectified, or has a dispute about the lender’s communications leading up to the issue of the default notice (RG 271.88).

Credit providers must not start or continue legal proceedings or other enforcement action against the complainant. Unless the statute of limitations is about to expire, this applies while the complaint is being handled at IDR (during the 21 calendar days) and for a reasonable time afterwards (RG 271.89).

Complaints involving hardship notices or requests to postpone enforcement proceedings must be treated as urgent matters (RG 271.92).

Where a complaint is about a hardship notice or request to postpone enforcement proceedings, the credit provider or lessor has 21 calendar days to consider and determine whether to agree to a change in the terms of the credit contract or lease for hardship or the request to postpone enforcement proceedings. However if the credit provider or lessor requires further information about a hardship notice, they have up to 28 calendar days from the date the information is requested but not received, or 21 calendar days from when they consider they have received the information requested (RG 271.93).

If a borrower and the credit provider or lessor have reached an agreement about a hardship notice or postponement of enforcement proceedings, the credit provider or lessor has a further 30 calendar days to confirm in writing the terms of change to the credit contract or lease or the conditions of postponement of enforcement proceedings (RG 271.99).

RG 271 says that the credit provider must inform the complainant of their right to complain to AFCA and provide AFCA’s contact details at certain points during the process of dealing with a hardship notice and/or request to postpone enforcement proceedings, namely when the credit provider or lessor:

  • advises the complainant in writing that the credit provider or lessor has not agreed to change the terms of their credit contract or lease, or that the provider or lessor does not agree to negotiate a postponement of enforcement proceedings; and
  • (if a change to the contract or lease terms or postponement has been agreed to) notifies the complainant in writing of the terms of the variation or conditions of the postponement. The credit provider or lessor must send this written notice within 30 calendar days of the agreement being reached (RG 271.100).

Customer advocates

A financial firm may offer a complainant the option of escalating their complaint to the customer advocate for that firm, as an alternative to AFCA, after an IDR response is issued. When making such an offer, the firm must not prevent complainants from exercising their right to access AFCA – for example, by presenting the customer advocate as a mandatory step in the IDR process (RG 271.109).

If a complainant chooses to escalate their complaint to the customer advocate, the total time spent dealing with the complaint must still not exceed the relevant maximum IDR timeframe. The total time includes both the IDR process and the customer advocate review (RG 271.110). Time stops running on the date that the IDR response is sent to the complainant and starts to run again from the date that the complainant notifies the financial firm that they wish to escalate the complaint to the customer advocate.

Links between the IDR process and AFCA

If a complaint goes through the IDR process but remains unresolved, or is not resolved within the relevant maximum IDR timeframe, the IDR process must require the firm to inform the complainant that they have a right to pursue their complaint with AFCA, and provide details about how to access AFCA (RG 271.111).

The IDR responses and IDR delay notifications that financial firms provide to complainants must also contain these details (RG 271.112).

Firms must also provide details about how a complainant can access AFCA in a range of disclosure documents, including financial services guides, product disclosure statements (PDSs), including short-form PDSs, credit guides, periodic statements (including exit statements), and forms and notices issued under the National Credit Code (RG 271.113).

Management of systemic issues

RG 271 says that boards must set clear accountabilities for complaints handling functions, including the management of systemic issues identified through consumer complaints (RG 271.118). If a financial firm provides reports to the board and/or executive committees, the reports must include metrics and analysis of consumer complaints including about systemic issues identified through those complaints (RG 271.119).

Financial firms are required to:

  • encourage and enable staff to escalate possible systemic issues they identify from individual complaints;
  • regularly analyse complaint data sets to identify systemic issues;
  • promptly escalate possible systemic issues to appropriate areas within the firm for investigation and action; and
  • report internally on the outcome of investigations, including actions taken, in a timely manner (RG 271.120).

Smaller firms which do not have escalation processes to investigate systemic issues must still act in a timely manner to investigate possible systemic issues identified from complaints.

Other matters

  • Accessibility: The IDR process must be easy to understand and use, including by people with disability or language difficulties (RG 271.134).
  • No charges or detriment: The IDR process must be free to complainants. ASIC considers that material explaining the IDR process must be provided free of charge to complainants and that complainants must be able to make or pursue their complaint via the IDR process free of charge (RG 271.141).
  • Resourcing: The IDR process must be resourced so that it operates fairly, effectively and efficiently, and financial firms must regularly review whether the IDR process is adequately resourced (RG 271.142).
  • Staff numbers: Staffing numbers must be sufficient to deal with complaints in a fair and effective manner within maximum IDR timeframes. This includes resourcing the IDR function to deal with intermittent spikes in complaint volumes (RG 271.143).
  • Empowering staff and financial delegations: Financial firms must provide relevant staff with appropriate authority to be able to resolve complaints (RG 271.146) and ensure that the authorities for determining and/or approving complaint outcomes (including product contract variations) and the financial delegations in place for paying amounts to complainants facilitate the fair and efficient resolution of complaints (RG 271.147).
  • Maximum IDR timeframes: Financial firms must adhere to ASIC’s requirements for issuing IDR responses within maximum IDR timeframes (RG 271.163).
  • Closing complaints: Financial firms are required to ensure that complaint resolution outcomes (e.g. refunds, fee waivers, correction of records, compensation payments) are implemented in a timely manner when a complaint is closed (RG 271.165).
  • Policy and procedures: ASIC requires that financial firms have a publicly available, readily accessible complaints policy and an internal complaint management procedure, and provide material that explains their IDR process free of charge to complainants (RG 271.172).
  • Data collection, analysis and internal reporting: Financial firms must have an effective system for recording information about complaints. The system must enable firms to keep track of the progress of each complaint (RG 271.179).
  • Report complaints data internally and publicly: Financial firms must provide reports about complaints data regularly to senior management and the firm’s board (or equivalent) (RG 271.183).

Patrick Dwyer and Kathleen Harris
Legal Directors

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