The Bedrock of Remediation: Building Strong Governance Frameworks

In our last article we looked at how Australian Financial Services Licensees (AFSL’s) can be smarter, faster and better at customer remediation through developing staff and focusing on effective prioritisation. In this article, we continue the series as we explore the bedrock of customer remediation – governance and accountability. Building strong governance frameworks in remediation and robust accountability mechanisms are critical for ensuring that remediation efforts are not only initiated but carried through to successful completion. 

This article is divided into two parts: the first focuses on establishing governance structures from scratch, while the second addresses reviewing and improving existing frameworks.

The Importance of Governance and Accountability

Effective governance and accountability are critical for ensuring that customer remediation efforts are well-managed and yield positive outcomes. 

The key components of an effective governance framework include clearly defined roles and responsibilities, a comprehensive governance framework, regular progress reviews, and transparent reporting mechanisms. These elements help maintain focus, ensure compliance with regulatory requirements, and build trust with customers.

Establishing Governance and Accountability

For AFSL’s that do not have effective governance and accountability structures in place, here are actionable steps to create them:

1. Define Roles and Responsibilities: Examine your customer remediation value chain, who’s involved, what value do they add and what do they produce. Clearly outline the specific roles and responsibilities for all stakeholders involved in the remediation process, from senior management to front-line employees. This ensures everyone knows their duties and expectations.
2. Create a Comprehensive Governance Framework: Develop a governance framework that includes robust policies, procedures, tools, templates, and protocols for overseeing remediation projects. Ensure this framework aligns with regulatory requirements and industry best practices.
3. Establish a Governance Committee: Form a governance committee with representatives from various departments such as risk management, compliance, customer service, and finance. This committee will oversee the implementation and adherence to governance structures.
4. Ensure Transparency and Accountability: Develop transparent reporting mechanisms that provide regular updates to stakeholders, including customers, regulatory bodies, and internal teams. This promotes accountability and builds trust in the remediation process. Implement accountability mechanisms that track and report on the performance of individuals and teams involved in the remediation process, ensuring that responsibilities are met and issues are promptly addressed.

Reviewing and Improving Existing Governance Frameworks

For entities with existing governance frameworks and strong accountability mechanisms, here are steps to review and improve these structures:

1. Regularly Review and Update Governance Structures: Schedule regular reviews of the governance framework and remediation value chain to ensure it remains relevant and effective in the face of changing regulations, business needs and processes. 
2. Enhance Accountability: Ensure roles and responsibilities of all stakeholders to ensure they remain aligned with the evolving needs of the remediation process. Adjust roles as necessary to address any gaps or overlaps.
3. Strengthen Governance Frameworks: Regularly update policies and procedures to reflect best practices and regulatory changes. Ensure all team members are trained on these updates.
4. Optimise the Governance Committee’s Function: Regularly assess the effectiveness of the governance committee in overseeing remediation projects. Ensure that the committee’s composition and processes are optimised for the current needs of the organisation. Streamline decision-making processes within the committee to ensure timely and effective resolutions of any issues that arise.
5. Maintain Transparency and Foster Open Communication: Promote open communication throughout the organisation, encouraging feedback and ensuring that any concerns are addressed promptly. This fosters a culture of transparency and continuous improvement. Continuously improve reporting mechanisms to ensure they provide clear, actionable insights to all stakeholders.

Wrap-up

By following these steps, AFSL’s can create or enhance their governance and accountability frameworks, ensuring that customer remediation efforts are effectively managed and aligned with regulatory expectations and industry best practices. 

If you’d like to discuss any of these opportunities now, or explore support from CRCG, please reach out (contact us at info@crcg.com.au or click here to submit a request online).