Customer Remediation: The First Steps

Unexpected issues and crises are part and parcel of business. When issues arise, customer remediation comes into play, and taking the right first steps is critical.

In our earlier insight Knowing when to remediate customers: aligning with ASIC’s expectations, we explored the four internal processes that need to be effective to ensure proactive identification of customer remediation.

In this article we look at what comes next.

Essential first steps in customer remediation

The first steps your business takes need to be tailored and effective, guiding you towards regaining trust and strengthening your customer relationships.

Customer Remediation Consulting (CRC) exists to help you navigate this crucial process. We provide clear steps and expert guidance to ensure you put right what has gone wrong.

1. Understand the issue

Quickly assess the situation’s scope and severity. Is it a small detour impacting a few customers, or a wider roadblock affecting many? Efficient categorisation and prioritisation allows you to:

• Allocate resources effectively – for issues that impact only a small number of customers and are straightforward, you may be able to complete customer remediation swiftly – this is in everyone’s interest. For more complex issues, understanding the severity and customer impact allows you to plan the ongoing work required more effectively.
• Meet your regulatory obligations – if the underlying issue being remediated is a reportable situation, it must be breach reported to ASIC in line with RG 78 Breach reporting by AFS licensees and credit licensees.

2. Triage

If the issue is ongoing, take immediate corrective action. Prioritise closing the system gap, adjusting the faulty process, or redirecting the misplaced effort. Swift action minimises the impact and prevents further disruption. Triage will vary depending on the severity of the customer impact, it could include:

• Ceasing activities – immediately halting processes, services or the sale of a product directly contributing to the customer impact.
• Protecting customers in hardship or vulnerable circumstances – this is a critical step and a requirement of ASIC’s Regulatory Guide 277.
• Transparent communication – proactively contacting affected customers and/or issuing public statements with clear information about the issue and the steps being taken to address widespread concerns or misinformation.

Failing to effectively triage can lead to significant consequences for organisations. There have been many recent examples of ASIC issuing penalties against organisations that have allowed known issues to proliferate and continue to impact customers. Some examples below:

• RACQ to pay $10 million for pricing discount failures
• Mercer to pay $12 million penalty for misleading representations and fee disclosure failures

3. Complete a comprehensive assessment

Accurately identifying the root cause of the issue is essential. This involves thorough internal investigations and acknowledging where systems or processes may have failed. A comprehensive assessment will include:

• Impact analysis – assess the customer impact, what caused it and how long has it been affecting customers. Understanding these features allows you to determine the starting point of the customer remediation.
• Internal reviews – reviewing completed audits, compliance assessments and conducting regular product reviews supports more effective impact analysis.
• Customer feedback – complaints are a critical component in confirming the starting point. Complaints allow you to test whether the impact analysis has been effective.

CRC: Navigating the remediation process

Customer remediation is an opportunity to showcase your organisation’s commitment to its customers. CRC is here to support you through this journey, ensuring positive outcomes for both your business and your customers.