ASIC releases practical field guide on consumer-centred remediation programs

  • ASIC’s field guide answers the frequently asked questions that ASIC receives.
  • The field guide offers practical guidance to assist licensees to rebuild trust and engagement with consumers who are the subject of the remediation
  • Licensees are expected to tailor their remediation programs to suit the particular circumstances of their consumers.

To help licensees design and execute consumer-centred remediation programs, ASIC has recently released a practical field guide titled ‘Making it right: How to run a consumer-centred remediation’ (the field guide).

A consumer-centred remediation is one that places consumers’ interests at the heart of every phase of the remediation. The field guide outlines the general principles under a consumer-centred approach to remediation, with particular focus on the consumers’ experience. It is scalable to all remediation programs regardless of size and complexity.

The field guide is based on evidence in the realm of behavioural science, while drawing on ASIC’s on-the-ground experience in supervising remediation. It does not set new legal obligations and should be applied alongside ASIC’s Regulatory Guide 256: Client review and remediation conducted by advice licensees (RG 256) and any update to RG 256 in due course.

The field guide is not to be construed as a checklist. Licensees are expected to tailor their remediation programs to suit the particular circumstances of their consumers.

Remediation programs are not simply about paying compensation — they represent an opportunity for licensees to rethink their commitment to consumers, drive positive consumer experience and address any reputational risks.

We consider that the field guide offers practical guidance to assist licensees to rebuild trust and engagement with consumers who are the subject of the remediation. Remediation programs are not simply about paying compensation — they represent an opportunity for licensees to rethink their commitment to consumers, drive positive consumer experience and address any reputational risks.

Applicability to various stages of remediation

For any remediation, the main goal is to return consumers, as closely as possible, to the position they would have otherwise been in. ASIC has provided guidance on what a consumer-centred approach entails during the life cycle of a remediation program, the key points of which are summarised below.

It is important to note at the outset that no consumer should be disadvantaged, at any stage of the remediation, by the lack of data or information. Where records are inadequate, consumers should be given the benefit of the doubt, which in some cases may require making beneficial assumptions that err in favour of the consumer.

Scoping What is the nature and extent of the problem?

To identify the issue at hand, licensees should focus on:

  • Identifying the root cause of the issue and any underlying drivers with the aim of preventing similar occurrences
  • Obtaining information and utilising expertise across the entire business, instead of adopting a siloed approach
  • Identifying any common, underlying threads that led to the issue through an analysis of the relevant products, services, systems, processes and people
  • Ensuring that this process is appropriately documented to inform, for instance, any gaps in knowledge and steps to overcome it

Assessing the population of affected consumers and extent of potential loss

  • Cast the net wide
  • Adopt an ‘if-not-why-not’ approach, ie, what evidence is available to support the conclusion that a consumer is not potentially affected?
  • Conduct appropriate testing for confirmation

Working in tranches

To increase efficiency, licensees should aim to work in tranches and prioritise certain groups as appropriate.
  Who are your affected consumers?

For a remediation to be consumer-centred, it is imperative for licensees to know their consumers, as well as their lives and needs. It is important to acknowledge that the issue being addressed in the remediation is in addition to life events and tasks that are ongoing in their lives.

Licensees should draw on information that is reasonably accessible internally and externally, and leverage any expertise in consumer or behavioural insights to help interpret that information.

Pause and reflect

Are there any knowledge gaps?

This stage involves identifying any knowledge gaps and overcoming them.

Decisions to rely on beneficial assumptions may be made. Any assumptions used should benefit the consumer(s) and be tested and monitored.
  How are you tracking against your overarching goal? Licensees should incorporate tools, early on in the remediation timeline, to regularly track and measure progress against the overarching goal (ie, to return consumers, as closely as possible, to the position they would have otherwise been in).
Design and build Mapping out consumers’ journeys

A consumer-centred remediation involves minimal consumer action.

When designing the journey for consumers, it is important to have regard to how the journey affects their perception of the organisation and brand.

Licensees should make it easy for the consumers (for example, processing refunds automatically), have regard to the wider context of the consumers’ lives, and be

‘fault tolerant’ (for example, consumers should not be disadvantaged if they made a mistake).
  Prepare an overarching communications plan

The plan should be formulated on the basis of the consumer journeys and knowledge about the affected consumers.

Key considerations include:

  • Timing and frequency of contact
  • What messages and information would be communicated, when and from whom?
  • The communication channels that are proposed to be used and whether multiple channels should be adopted
  • Whether there are any calls to action (ideally none)
How progress updates and additional support (for example, translation services, financial counselling) may be provided through a central contact point
  Developing the content

There is no one-size-fits-all approach in a consumer-centred remediation.

The content and appearance of the communications to consumers should be prepared with the following factors in mind:

  • The purpose of each piece of communication and whether it needs to be adapted to suit the consumers (for example, literacy and numeracy ability, language skills and age)
  • Keeping any requests for consumer action to a minimum
  • Being transparent about what has happened, the timeframe of the remediation, the amount and calculation of the refund
  • Being succinct and using simple language and appropriate format to assist with consumers’ understanding
Considering the use of behavioural insights in appropriate cases
Test and Track ‘Soft launch’ for large/complex remediation programs

What is a ‘soft launch’?

A ‘soft launch’ is a process by which the effectiveness of the approach undergoes testing with a small, mixed group of consumers (not only one specific group) before the remediation is fully rolled out to all relevant consumers.

What are the benefits?

  • Helps refine the remediation, identify any issues and determine knowledge gaps at the start
  • Helps refine communications and internal procedures
  • Helps save costs as the likelihood of having to revisit parts of the remediation is reduced

With the above benefits in mind, a ‘soft launch’ causes only minimal delay (if any) to the remediation when considered in its entirety.

This phase should be factored into the planning and timeline of the remediation as a whole. 

  Continuous learning and improvement Apply learnings, including those from any testing (for example, ‘soft launch’, pilot testing), to guide continuous improvements to consumer journeys, communications and internal processes
  Keeping good records Record of testing performed can demonstrate the methodology and the corresponding outcomes. This is particularly helpful as refinements are being made as the process evolves.
  Monitoring progress and effectiveness

To monitor outcomes appropriately, licensees should:

  • Identify and track meaningful metrics to record progress against the outcome goal – ‘consumer outcome’ is always a key metric to track in any remediation
  • Record these metrics at regular points throughout the remediation
  • Conduct an analysis of the data obtained to identify and resolve any issues, and assess the outcomes against the goal
  • Maintain a proper record of the outcomes and learnings obtained
Revise process by monitoring additional metrics where necessary
  Sharing learnings Learnings obtained from a remediation may inform other remediation programs within the organisation
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Proposed updates to RG 256

Separately, a consultation process has commenced in relation to ASIC’s proposed updates to RG 256 on topics including:

  • When to initiate a remediation
  • Review period applicable to a remediation
  • Reliance on beneficial assumptions
  • Calculation of foregone returns or interest
  • Approach to locating consumers and automatic payments
  • Remediation funds that cannot be returned to affected consumers
  • Use of settlement deeds and reliance on consumers’ implied consent of remediation outcomes

The first round of submissions were due on 26 February 2021. It is anticipated that a draft regulatory guidance would be released for further consultation in due course.

Claudine Salameh can be contacted on (02) 9330 8195 or by email at claudine.salameh@nortonrosefulbright.com. Helen Taylor can be contacted on (02) 9330 8218 or by email at helen.taylor@nortonrosefulbright.com and Candy Lau can be contacted on (02) 9330 8114 or by email at candy.lau@nortonrosefulbright.com.