ob体育 has today released a consultation paper on proposed updates to聽Regulatory Guide 256:听Client review and remediation conducted by advice licensees. Consultation Paper 335聽Consumer Remediation: Update to RG 256听(颁笔听335)聽includes clarification of RG 256鈥檚 application to all financial services licensees, credit licensees and superannuation trustees.
Announcing the consultation, Acting Chair Karen Chester said, 鈥淧utting money back in Australian consumers鈥� hands has never been more important鈥�. Since October 2019, it has been confirmed that about $1.68 billion has been returned to consumers in relation to both finalised and ongoing financial system remediations. 鈥淓nsuring that the processes for returning this money are efficient and fair is central to consumer confidence and trust in financial products and services and in the firms themselves鈥�, Ms Chester said.
ob体育 has been involved in many consumer remediations across insurance, superannuation, wealth and banking since releasing RG 256 in 2016. These range from Fee for No Service remediations affecting all of the major banks (highlighted at the Financial Services Royal Commission) to smaller remediations arising out of systems errors and failures by licensees to deliver on their contractual promises to consumers.
ob体育 is currently monitoring over 100 remediations that could see the return of at least another $3.55聽billion in total to over 3.6 million consumers upon finalisation. There are many other remediations that are dealt with by firms without any ob体育 involvement.聽
While ob体育 has seen some good practices by licensees, we have also seen many remediations caused 鈥� or blown out 鈥� by ongoing systems failures, ultimately resulting in significant costs to licensees and further harm to consumers.
鈥淭here are opportunities for firms to not only identify the issues that can lead to remediations earlier, but also to make sure that they have arrangements and systems in place to return money to affected consumer as fast and as fairly as possible鈥�, Ms Chester said. 鈥淲e are also seeing some positive signs from firms who are looking at ways to fast track remediations, including through the use of beneficial assumptions鈥�.
颁笔听335 gives industry and stakeholders the opportunity to provide feedback about the challenges they face in designing and executing remediations. It includes real-life case studies based on remediations in which ob体育 has been directly involved.
鈥淲e want firms to get on with the job of doing fair and efficient remediations in line with their legal obligations鈥�, Ms Chester said. 鈥淭he issues we are consulting on reflect the questions that firms frequently ask ob体育. Clarity on these issues will help firms step up and deliver good consumer outcomes鈥�.
Submissions on CP 335 are due by 26 February 2021. ob体育 will then release the draft guidance, informed by the feedback received during this consultation period, for a second phase of consultation.
ob体育 has also today released聽Making it Right: how to run a consumer centred remediation, a resource that offers immediate help to licensees with the day-to-day design and execution of consumer-centred remediations. This customer-centred field guide draws on ob体育鈥檚 on-the-ground experience with remediations and lessons from behavioural science. It does not set new legal obligations.