Remediation Insights

Financial remediation refers to remedial activities aimed at identifying consumers who have suffered financial loss as a result of a misconduct or other failure and returning impacted customers to the position they would have otherwise been in, as closely as possible. Where it is evident the impact to the customer is financial in nature, then monetary compensation is required to ensure the customer is returned to the position they would have otherwise been in. 

In the context of Regulatory Guide 277 (RG277) and from the perspective of Australian Financial Services (AFS) licensees, consumer (or customer) remediation refers to remedial activities aimed at identifying consumers who have suffered loss as a result of a misconduct or other failure and executing processes aimed at returning impacted customers to the position they would have otherwise been in, as closely as possible. This encompasses the entire suite of quantification, calculation, payment and communication activities (if and where applicable). It should also be further noted that remedies may involve monetary or non-monetary compensation, or a combination of both.

Regulatory Guide 277 (RG277) is a guide issued by the Australian Securities and Investments Commission (ASIC) outlining guidelines to be interpreted and followed by all licensees within the Australian financial system that are engaging in remediation activities. It is a 94 page document that, among other useful information, details 9 principles for conducting remediation. 

You can find Regulatory Guide 277 (RG 277) published on the official Australian Securities & Investments Commission (ASIC) website. Click the below link to be transferred direct to the ASIC website and read through RG 277 yourself: 

RG 277 was published on 27 September 2022. This guide became effective as at the date of publication. Any remediation projects commencing on or after 27 September 2022 must be conducted in a manner consistent with Regulatory Guide 277 Consumer Remediation.

Regulatory Guide 256 (RG 256) relates to client review and remediation conducted by advice licensees. Issued 15 September 2016, it was the primary regulatory guide relating to remediation prior to the publication of RG 277. Noting however, RG 256 was written with specific reference to advice remediation, meaning prior to 27 September 2022, non-advice related remediation projects were required to interpret and apply the principles noted in RG 256 where required or where guidance could not otherwise be directly applied. 

AFS licensees must adhere to the direction outlined in RG 277 when remediating customers who have suffered loss as a result of a misconduct or other failure.