Same wine in a different bottle or a radical new approach to complaints handling? It all depends on who you talk to.
Australia is getting a new Super Ombudsman and, depending on which side of the fence you sit, that’s either major news or nothing to write home about.
The new body, the Australian Financial Complaints Authority (AFCA) will replace the existing Financial Ombudsman Service (FOS) the Superannuation Complaints Tribunal (SCT) and the Credit and Investments Ombudsman (CIO) – with a single organisation. It follows recommendations laid down by Professor Ian Ramsay who argued that the creation of a new unified body was needed to address sliding confidence in the financial sector.
As well as combining the three existing bodies, the new ombudsman will give a bit more power to the Australian Securities and Investment Commission (ASIC) to issue directions and allows it to publish data on dispute resolution activity. It will also increase the scope of its oversight to include smaller businesses.
That change was needed is not in question. Ever since the financial crisis of 2008 confidence in the culture of the financial sector has taken a nose dive. Regulators have often been slow to act and inefficient. Reports, suggesting that 18% of the rulings made by FOS had gone unpaid – a total of $13million – added weight to the idea that urgent change was needed.
At the very least, bringing everything under one roof should simplify processes and create a clear line of accountability. It should make it easier to see which cases have been paid and that enforcement measures are being carried out, but not everyone is buying into the new approach.
Some have suggested the new measures simply repackage the same old system – complete with the same old failings. Some felt the Government’s aim was more to avoid a Royal Commission than to truly inject change. If that’s true they were unsuccessful. It is already well on its way and already has plenty to work on. Australia’s main financial regulator ASIC revealed to the commission that 90% of financial advisers who provide advice to self-managed super funds had failed to comply with the best interests of their clients.
For now, though, the incoming chair of the AFCA says she expects it to be busy. The body will work more closely with the companies it oversees to help improve internal dispute resolution processes and their corporate culture to avoid complaints being escalated to the consumer-led body.
This means establishing an effective strategy to improve conduct, and a more efficient complaints handling system to ensure all issues are dealt with promptly and efficiently. Negative customer service stories are inevitable – but if they are dealt with quickly they needn’t become a major reputational headache for companies.
Change is coming; whether the AFCA turns out to be everything we hope for or another white elephant the pressure for reform and to improve conduct and culture is growing. The smartest players will be those which make the move now before they are pushed.