The Australian Financial Complaints Authority has been called on to sharpen aspects of its proposed comparative reporting model, including a more comprehensive “business sizing metric” and more information on the outcomes of disputes.
AFCA has issued a consultation paper to selected industry participants (it has not made it public), seeking feedback on its approach to comparative reporting. It proposes to publish the number of complaints accepted for each financial firm, as well as categorising the data according to the product group which the complaint falls into.
AFCA is proposing to publish the number of complaints received, accepted and the resolution rate. It plans to report twice a year. It proposes a minimum threshold of four complaints in 2018/19 for inclusion in the report.
It is proposing to use raw complaint numbers and a business sizing metric that is simpler than previous approaches. The metric would describe companies using terms such as “small”, “medium”, “large” or “very large”.
The approach taken by the Financial Ombudsman Services was to refer to the likelihood of a complaint per 100,000 customers, as a sizing metric.
The Australian Institute of Superannuation Trustees says it would like to see a methodology similar to this retained. Its submission says: “The simple business size metric will not paint a truly accountable or fair picture. It will not show the intensity of the volume of complaints lodged against that business.”
AIST proposes that the report include the relative frequency of complaints by either the number of accounts held by the financial organisation or the number of customers or superannuation members.
AIST has a number of other recommendations. It wants the description of product type at a more granular level than AFCA is proposing. For example, when detailing with complaints about life insurance products it says AFCA should detail the type of life insurance product.
It wants details of the amount of redress paid. “This is an important component of driving the public’s confidence in the effectiveness of the complaints system.”
It says outsourced providers should be identified if they are subject to complaints.
It says: “AFCA’s public report needs to contain data that may assist with identifying the types of organisations that create the need for greater regulatory focus. For example, it could include any contravention reports from AFCA to ASIC, APRA or the ATO.
“It could include commentary on the success or otherwise of legislative and regulatory initiatives, and trends and patterns of complaints that highlight the need for reform.”
The Consumer Action Law Centre wants the comparative reporting data to be searchable by business or trade name and be available indefinitely on the AFCA website.
Like AIST, it wants more detail on outcomes. “Complaint summaries and outcomes should be included to ensure the data provides a more complete picture to consumers about the financial service provider.”
It says it is important to distinguish the method by which complaints are resolved.
On the issue of business sizing, it says: “The size of the financial firm is less likely to be a factor for consumers in their decision-making, when comparing firms and products. On the other hand, financial firms and consumer advocates are likely to find this information useful, for example, to enable them to set benchmarks or compare external data or see trends.
“To balance these two competing interests, we would suggest making data searchable online with the option of excluding certain metrics.”
Tags: Australian Financial Complaints Authority, comparative reporting, Australian Institute of Superannuation Trustees, Consumer Action Law Centre