ASIC takes legal action over poor dispute resolution
The Australian Securities and Investments Commission (ASIC) has commenced civil penalty proceedings in the Federal Court alleging Telstra Super failed to meet internal dispute resolution requirements.
ASIC alleges that Telstra Super failed to operate efficiently, honestly and fairly when it failed to comply with its procedures, and that it sent delay notifications to complainants when it was not justified to do so and did not have adequate resources to comply with its internal dispute resolution procedures.
It is the first proceeding under a regime that came into effect two years ago.
ASIC warns it could “readily identify other licensees which are regularly failing to meet the timeframes for responding to complaints”.
ASIC Deputy Chair Sarah Court says financial service providers need to prioritise dispute resolution procedures.
"ASIC expects the financial services industry to have effective dispute resolution procedures in place, and, importantly, to have the systems and resourcing to ensure they are being put into practice,” Ms Court said.
ASIC alleges 40% of Telstra Super’s responses to complainants between October 22 2021 and January 13 did not comply with its own dispute resolution procedures, including 106 complainants who were not responded to within a required 45-day timeframe.
Telstra Super received 337 superannuation complaints during the period but failed to inform 85 complainants about why there was a delay in responding to their complaint or inform 22 complainants about their right to take their complaint to the Australian Financial Complaints Authority (AFCA).
ASIC says the "frequency, nature and extent" of the breaches during a 15-month period show there was a process failure over a lengthy period, and says Telstra Super failed to do all things necessary to ensure its financial services were provided "efficiently, honestly and fairly".
ASIC is seeking declarations, pecuniary penalties and other orders against Telstra Super. The date for the first case management hearing is yet to be scheduled.
Financial services licensees are required to report failures that cause them to breach an obligation to provide financial services "efficiently, honestly and fairly," and subscribers to the General Insurance Code of Practice are also obliged to report significant breaches of the complaints requirements in Part 11 of the Code to the Code Governance Committee.