ASIC CLASS ORDER [CO 09/339]

EXPLANATORY STATEMENT

Prepared by the Australian Securities and Investments Commission

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Class Order [CO 09/339] under subparagraphs 912A(2)(a)(i) and 1017G(2)(a)(i) of the Corporations Act 2001 (the Act).

Subparagraphs 912A(2)(a)(i) and 1017G(2)(a)(i) provides that ASIC may make or approve standards and requirements for an internal dispute resolution procedure.

1. Background

Subparagraphs 912A(2)(a)(i) and 1017G(2)(a)(i) requires an Australian financial service (AFS) licensee, unlicensed secondary seller and unlicensed product issuer to have an internal dispute resolution procedure that:

(a)   complies with the standards and requirements made or approved by ASIC; and

(b)   covers complaints made by retail clients in relation to the financial services provided.

In making or approving standards and requirements in relation to an internal dispute resolution procedure, ASIC must take into account the Australian Standard on Complaints Handling (AS 4269-1995) and any other matter ASIC considers relevant: reg 7.6.02(1) and 7.9.77(1).

We anticipate that the Australian Government will update reg 7.6.02(1) and 7.9.77(1) to refer to the new Australian Standard on Complaints Handling (AS ISO 100002 – 2006 Customer satisfaction-Guidelines for complaints handling in organisations). This class order sets out:

(a)   our new requirements for internal dispute resolution procedures taking into account AS ISO 10002-2006; and

(b)   our transitional requirements for internal dispute resolution procedures taking into account AS 4269-1995. These will apply until 31 December 2009.

2. Purpose of the class order

The purpose of this class order is to outline ASICs standards and requirements for an internal dispute resolution procedure.

3. Operation of the class order

CO 09/339 requires existing AFS licensees, unlicensed secondary sellers and unlicensed product issuers to comply with the new requirements for internal dispute resolution procedures from 1 January 2010. However, the class order does not prevent these persons from complying with the new requirements at an earlier date. New AFS licensees, unlicensed secondary sellers, and unlicensed product issuers who enter the market prior to 1 January 2010 can also choose to establish internal dispute procedures that comply with the new requirements.

New requirements for internal dispute resolution procedures

From 1 January 2010, AFS licensees, unlicensed secondary sellers and unlicensed product issuers must have an internal dispute resolution procedure that complies with the following standards and requirements:

(a)   the procedure cover a "complaint" as defined in AS ISO 10002-2006;

(b)   the "Guiding Principles" in section 4 of AS ISO 10002-2006;

(c)   the following sections of AS ISO 10002-2006:

(i)                 section 5.1 – Commitment;

(ii)               section 6.4 – Resources;

(iii)            section 8.1 – Collection of information;

(iv)             section 8.2 – Analysis and evaluation of complaints;

(d)   the procedure must include adequate measures for informing complainants about the availability and accessibility of an external dispute resolution scheme of which the AFS licensee, unlicensed secondary seller or unlicensed product issuer is a member.

Transitional requirements for internal dispute resolution procedures

Until 31 December 2009, this class order will permit an AFS licensee, unlicensed secondary seller and unlicensed product issuer to have an internal dispute resolution procedure that complies with the following standards and requirements:

(a)   the "Essential elements of effective complaints handling" in section 2 of AS 4269-1995;

(b)   the procedure is appropriately documented so as to:

(i)                 ensure that a person, complainant or otherwise, will be able to find out how and by whom a complaint will be handled and what further rights a complainant will have if a complainant continues to be dissatisfied; and

(ii)               assist in the training of, and provide guidance to, employees or agents of the relevant person to handle complaints;

(c)   the procedure must include adequate measures for informing complainants about the availability and accessibility of an external dispute resolution scheme of which the relevant person is a member.

4. Documents incorporated by reference

This class order incorporates:

(a)   Australian Standard AS 4269-1995 Complaints Handling; and

(b)   Australian Standard AS ISO 10002-2006 Customer satisfaction - Guidelines for complaints handling in organizations.

Both of these Standards are published by Standards Australia who is recognised by the Government as Australia's peak Standards body. AS 4269-1995 was superseded by AS ISO 10002-2006 in 2006, and the objective of the Standards is to provide guidance on complaints handling related to products or services of an organisation.

AS 4269-1995 and AS ISO 10002-2006 are available to be purchased from www.saiglobal.com/shop.

5. Consultation

Before making CO 09/339, ASIC consulted with relevant industry stakeholders about the policy underlying the class order. The consultation process included the publication of Consultation Paper 102 Dispute resolution – review of RG 139 and RG 165 in November 2008, which outlined ASICs policy proposals under this class order and sought comments from stakeholders. 

ASIC prepared a RIS for the requirements contained in Regulatory Guide 165 Licensing: internal and external dispute resolution, which was approved by OBPR.