Why is timely customer remediation so challenging for Australian Financial Services Licensees?

Operational capability, capacity, and the inherent characteristics of the financial service industry itself make it challenging for AFSL’s to remediate customers efficiently.

In this article CRCG takes a top down view of the more common challenges and more importantly, the opportunities for improving efficiency in customer remediation. This article will be the start of a series that explores each of the opportunities in more detail.

The Challenges

By tackling these issues head-on, AFSL’s can complete customer remediation within acceptable timeframes, ultimately restoring the trust and confidence of their customers and stakeholders.

• Data Management – At the core of any customer remediation program is the need to collate accurate and comprehensive data. Many AFSL’s struggle with legacy systems, making data retrieval and analysis challenging. The volume of data, coupled with inaccuracies and gaps, makes it difficult to identify affected customers and calculate the appropriate compensation, leading to delays.

• Resource Constraints – Effective remediation requires skilled personnel, technology, and time. Allocating the necessary resources to customer remediation is critical but can also disrupt day to day operations. This can lead to prioritisation issues, where AFSL’s focus on immediate operational needs at the expense of timely remediation.

• Operational Inefficiency – Untuned processes, impractical or sub-standard policies, a lack of standardised documentation, poor project management, and lack of automation, can significantly slow down remediation efforts.

• Poor Understanding of the Problem – Initial assessments of the remediation scope may underestimate the complexity and scale of the effort required. As projects progress, unforeseen challenges can emerge, leading to revisions and expansions of the scope.

• Communicating with Customers – Effective communication with impacted customers is a critical component of any remediation program. AFSL’s must not only identify and communicate to impacted individuals but also manage their inquiries and concerns throughout the process. Remediating former customers can multiply these challenges dramatically, often leading to a long tail of work to exhaust reasonable endeavors to find and pay all impacted customers.

The Opportunities

AFSL’s today face significant challenges in ensuring that the incidents that cause customer remediation are not just acknowledged but resolved within a reasonable timeframe. A backlog that sees incidents unresolved for over 12 months not only undermines customer trust but also invites regulatory scrutiny.

A strategic approach focused on efficiency, prioritisation, and customer-centricity, supports more effective customer remediation.

Here are the opportunities as CRCG sees them:

• Enhanced Data Governance

Data governance and curation is central to streamlining the remediation process. Investing data mapping, legacy system interfaces and fostering a culture of data responsibility are not only critical for effective remediation, but also to unlocking the potential of technologies like artificial intelligence.

• Process Optimisation

Operational inefficiencies are a major contributor to backlog build-up. By adopting Lean and Agile methodologies, AFSL’s can optimise remediation processes.

This includes simplifying workflows, developing reusable standardised documentation, removing unnecessary steps, and automating repetitive tasks. Such optimisation not only speeds up the remediation process but also ensures consistency and accuracy in handling incidents.

Another important part of fostering efficient and effective processes is developing effective and usable remediation policies to ensure decision making is guided and delivery is executed in line with regulator expectations.

• Resource Competency and Prioritisation

Addressing a remediation backlog requires adequate and dedicated resources. AFSL’s need to ensure that sufficient personnel with the right skills are available to manage remediation projects.

Training to enhance employee skill in customer remediation, data analysis, customer communication, and project management are also vital.

• Strengthened Governance and Accountability

Clear governance structures and accountability mechanisms are essential to ensure that remediation efforts are not just initiated but seen through to completion. Senior management should actively oversee remediation projects, setting clear deadlines and KPIs for teams to meet. Regular progress reviews and reporting can help maintain momentum and ensure transparency.

• Proactive Communication

Engaging with customers impacted by errors or failures is crucial. Proactive and transparent communication about the status of their remediation not only rebuilds trust but can also reduce the volume of inquiries. Additionally, feedback mechanisms can provide insights into the effectiveness of the remediation efforts.

Wrap-up

Capitalising on these opportunities allows AFSL’s to remediate customers effectively and efficiently. But what are the steps and how do you go about it? Over the coming weeks CRCG will be publish an in depth article on each of the opportunities. 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).