New process for resolving disputes with your bank or financial service provider

By November 27, 2020 October 10th, 2022 Blogs, Business, Dispute Resolution, Policy & Procedure

November 2020


The Australian Securities and Investments Commission (ASIC) has recently released a new guideline requiring banks and other financial service providers to ensure they have an internal dispute resolution procedure available for customers and small businesses.  The new internal dispute resolution process must be in place by 5 October 2021.

Key Points

  • ASIC requires financial service firms to establish an internal dispute resolution (IDR) procedure which complies with the new guidelines.
  • The key changes in the new guidelines include:
    • a better understanding of the definition of ‘complaint’;
    • improving timeliness and efficiency in complaints handling;
    • enhancing the quality of IDR responses;
    • improving dealings with customer advocates and representatives; and
    • fostering accountability and resources for complaint management.
  • If a systemic issue within a financial service firm is identified, the matter can be escalated to Australian Financial Complaints Authority (AFCA) for investigation.


The ASIC guidelines require financial service firms to have an IDR system in place that deals with consumer and small business complaints.  The guideline will come into effect on 5 October 2021, and until then, financial service firms must continue to follow the current guidelines.

Generally, ASIC requires a financial service firm to have the following IDR standards and requirements:

  • top-level commitment to an effective, fair and timely complaint;
  • enabling complaints;
  • resourcing;
  • responsiveness
  • objectivity and fairness;
  • complaint management policies and procedures;
  • data collection, analysis and internal reporting; and
  • continuous improvement of the IDR process.


A financial service firm must develop and maintain a robust IDR process, including having all procedures, documents, policies, resources, governance and arrangements in place to handle complaints.  This includes dealing with complaints made by small businesses, being a business that had less than 100 employees at the time of the act or omission by the financial service firm who gave rise to the complaint.  This definition guarantees consistent dispute resolution access for small business complaints through both IDR and external dispute resolution.

The current guidelines provide the foundational aspects of the IDR process.  However, the new guidelines are considered a progressive approach to complaints handling and provides the following key improvements:

  • Definition of “Complaint”

The definition of ‘complaint’ must be an expression of dissatisfaction made to or about an organisation, 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.  The new guideline also recognises complaints posted on social media channels or accounts owned or controlled by the financial service firm, where the complainant is both identifiable and contactable.

  • Reduced Timeframes to Managing Complaints

Under both the current and new guidelines, a financial service firm must acknowledge receipt of the complaint within 24 hours (or one business day) or as soon as practicable.  However, under the new guideline, the maximum timeframe to provide an IDR response to a complaint has now been reduced from 45 days to 30 days.  It also provides some exceptions to the new maximum timeframe.  For example:

  • if the resolution to a complaint is particularly complicated; and/or
  • the circumstances that cause the delay are out of the financial service firm’s control.

If there is a delay in the response, the financial service firm must notify the complainant of the reason for the delay.

  • IDR Response New Disclosure Requirements

The new guidelines require a financial service firm to communicate the outcome of the complaint, by either:

  • confirming the actions taken by the financial service firm to resolve the complaint fully; or
  • providing reasons for rejection or partial rejection of the complaint.

The IDR response must also provide information about the rights to escalate the complaint to AFCA (and its contact details) if a consumer or small business is dissatisfied with the response.

If the financial service firm 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 service 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.

The level of detail in the IDR response should reflect the complexity of the complaint and the nature and extent of any investigation conducted by the financial service firm.

  • Role of Customer Advocates

Some financial service firms offer the option of escalating complaints to a customer advocate, as an alternative to AFCA, after an IDR response is issued.  Under the new guidelines, if a customer advocate is appointed to resolve the complaint, the financial service firm must not prevent the complainant from exercising its rights to access AFCA.  The total time spent dealing with the complaint with the customer advocate must not exceed the maximum IDR timeframe (e.g. 30 days after receiving the complaint).

  • Dealing with a Representative

Representatives are generally allowed to lodge complaints on behalf of consumers or small businesses.  The new guidelines set out the approach for a financial service firm when dealing with the representative of the complainant.  Once a representative for the complainant is appointed, the financial service firm must not contact the complainant directly unless specifically requested, or:

  • If there is a reasonable belief that the representative is:
    • acting against the complainant’s best interests;
    • acting in a deceptive or misleading manner; or
    • not authorised to represent the complainant; or
  • at the time of dealing with the complaint, the representative has been excluded by AFCA from representing the complainant in relation to any complaint lodged with AFCA.
  • New Resourcing Requirements

Under the new guidelines, a financial service firm must review its IDR process to assess whether it has sufficient staff to deal with complaints in a fair and effective manner within the minimum IDR timeframes.  It must also ensure that its relevant staff have appropriate authority to determine and/or approve complaint outcomes to facilitate a fair and efficient resolution of complaints.

If a number of complaints from a particular financial service firm are escalated to AFCA, it may be an indication of systemic issues within that firm.  AFCA has a statutory responsibility to report financial service firm to a regulator (i.e. ASIC, Australian Prudential Regulation Authority or the Australian Taxation Office) as soon practicable after it considers that there is a systemic issue.


If you have a complaint with your bank or financial service provider, we can assist and represent you in obtaining a satisfactory resolution of your complaint.  We are experts in dispute resolution and would be happy to provide you with specific advice on the best course of action available.

Contact us by phone on (02) 9189 5288 or by email at

Craig Higginbotham and Richen Mojica
27 November 2020

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