Knowing when to remediate customers: aligning with ASIC’s expectations

In today’s economic climate, every Australian financial services organisation should be able to effectively answer the question, when do you need to remediate customers? Proactively identifying and addressing customer harm and knowing when to remediate customers is a crucial aspect of maintaining a business’ social licence and financial health. Effective customer remediation rebuilds customer trust and loyalty while aligning with the goals and expectations of regulatory bodies such as the Australian Securities and Investments Commission (ASIC). Both Regulatory Guide 277 and the complementary ‘Making it Right’ field guide advocate consumer-centric remediation (ASIC, 2022a; ASIC, 2022b). – For more information on Regulatory Guide 277 and the ‘Making it Right’ field guide – refer to FAQs section of our insights page.

There are four primary areas to focus on when developing effective internal processes to ensure proactive identification of situations in which there is a need to remediate customers. these include:

1. Comprehensive governance, risk management and compliance (GRC) 
2. Effective complaint handling and Systemic Customer Issue management
3. Deep trend analysis
4. Cultivation of a culture of customer well-being

Diagram A: Internal processes required to proactively identify the need for remediation

Governance, risk management and compliance (GRC)

At the core of knowing when to remediate customers is the establishment of a GRC framework. The framework must include regulatory compliance, appropriate risk appetite and policy setting, self-assessment, product and service risk assessment, and in-life monitoring and assurance. 

Effective GRC always includes the regular review of customer outcomes and product performance. These reviews serve as a mechanism for the early detection of issues that might necessitate remediation, ensuring that the business remains compliant and customer-centric. A holistic approach is vital for early identification and remediation of harm. Key takeaways:

• Regular Risk Assessments: Conduct ongoing assessments to identify potential risks in products and services. This involves evaluating all aspects of business operations to foresee areas where customers might be negatively impacted.
• Compliance Monitoring: Regularly monitor compliance with industry regulations and standards. This ensures that any deviation from legal and ethical standards that could harm customers is quickly identified.
• Internal Audits: Conduct internal audits of various business processes. Audits help in uncovering hidden issues and gaps in processes that could lead to customer harm.
• Review and Update: Regularly review and update policies and procedures based on the findings from these steps to ensure continuous improvement in identifying potential remediation needs.

Complaint handling and Systemic Customer Issues

Aligned with ASIC’s Regulatory Guide 271, businesses are mandated to implement a robust and efficient process for handling complaints. Knowing when to remediate customers is largely dependent on complaint management. Complaints are often the first indicator of deeper systemic issues and provide a critical insight into potential areas of customer harm. A well-designed complaint handling process not only resolves individual concerns but also aggregates complaint data to identify patterns of systemic issues. This process ensures that customers are heard and respected, which is a crucial step in maintaining trust and identifying areas needing remediation. Key takeaways:

• Employee Training and Awareness: Ensure employees are trained and aware of the importance of identifying potential issues. A well-informed workforce can play a crucial role in early detection of problems.
• Customer Feedback Analysis: Systematically collect and analyse customer feedback. This includes reviewing complaints, suggestions, and reviews to identify common issues or patterns that might require remediation.

Trend analysis

Knowing when to remediate customers delves beyond surface-level metrics and involves engaging in deep trend analysis. This includes tracing transactional patterns back to their origins in product design to ensure that the expected outcomes are being met for customers. Such scrutiny can uncover instances where financial outcomes are not aligned with customer interests, thus signaling the need for remediation measures. This level of analysis is critical in proactive customer remediation and aligns with best practice standards in financial services. Key takeaways:

• Transparent Reporting Systems: Implement transparent systems for reporting issues. Employees should have clear channels to report potential problems without fear of repercussion.
• Data Analysis and Trend Spotting: Utilise data analytics to track trends and patterns in customer interactions and product performance. Advanced analytics can help in predicting areas where issues are likely to arise.

Culture

It is critical for businesses to foster a culture that prioritises customer well-being and outcomes. This cultural shift ensures that the processes outlined above are more than mere compliance exercises. It embeds customer-centricity into the organisational ethos, thereby ensuring long-term alignment with both regulatory expectations and customer satisfaction. Key takeaways:

• Proactive Communication: Maintain open lines of communication with customers to gather feedback proactively, rather than waiting for complaints to arise.
• Stakeholder Engagement: Engage with stakeholders, including employees, customers, and partners, to gain diverse insights into potential issues.

Bringing it all together

Take a look at the infographic below, noting a number of tasks and activities organisations can undertake to ensure they proactively identify risks and systemic customer issues, analyse trends and foster a customer centric culture. Knowing when to remediate customers hinges on the implementation of the below noted tasks.

Diagram B: The complete cycle, proactively Identifying the need for customer remediation

CRC offers expert guidance in implementing or refining these critical frameworks. Our expertise ensures that the need for remediation is recognised in a timely manner and addressed effectively, keeping businesses aligned with ASIC’s guidelines and customer expectations. CRC’s bespoke solutions in GRC and customer remediation are designed to cater to the specific needs of each business, ensuring a holistic approach to customer welfare and regulatory adherence.

In conclusion, knowing when to remediate customers is largely dependent on the proactive identification and rectification of customer harm. This is an essential aspect of business operations, extending beyond mere regulatory compliance. It is integral to maintaining trust, reputation, and financial stability. By aligning with ASIC’s guidelines and fostering a culture of customer well-being, businesses can ensure they are on the right path to effective customer remediation.

References:

ASIC. (2022a). Regulatory Guide 277: Consumer Remediation.

ASIC. (2022b). Making it Right: How to Run a Consumer-Centered Remediation.

Nikki Cornwell, Christopher Bilson, Adrian Gepp, Steven Stern & Bruce J Vanstone (2023) The role of data analytics within operational risk management: A systematic review from the financial services and energy sectors, Journal of the Operational Research Society, 74:1, 374-402