Remediation For Financial Services Explained

The Australian Securities and Investments Commission (ASIC) is in the process of tightening regulation when it comes to remediation in financial services.

ASIC recently introduced CP 350, a more comprehensive guide than RG 256, to solve the gap in what they are expecting of companies when they are remediating consumers. 

Considering the requirements for this industry, it is imperative that you understand remediation, the regulation and how to remediate your clients properly if you are in this industry.

What is remediation?

Remediation is important for businesses in the financial services sector in order to uphold community expectations, maintain their reputation and meet regulatory requirements. 

If one of your advice licensees gives false or misleading advice that affects your clients, you must seek to remediate them. The process requires the company to investigate the extent of the failure and reimburse the consumers who have suffered loss as a result of the action, if appropriate. 

From 2017 to 2019, the size of customer remediation provisions has risen from AUD $1.3 billion to AUD $9 billion. To make this right, ASIC is tightening restrictions so that this can be remedied with the general public. 

What does the regulation say?

ASIC’s remediation regulations require AFS and credit licensees to notify clients affected by certain breaches of the law, investigate the nature and full extent of those breaches and remediate affected clients within certain timeframes. 

These requirements are very customer-centric. They emphasise that it is the result of the company’s actions that the consumer has suffered loss, so they make it a key principle for companies to implement a consumer-centred remediation process. 

In addition to this, licensees must also maintain records in order to show compliance.

ASIC is so serious about licensee’s obligations to maintain records that demonstrate compliance to consumer remediation regulations that they impose Criminal Sanctions:

“The notify, investigate and remediate obligations impose criminal sanctions on particular licensees for failing to maintain records to demonstrate compliance with the requirement to notify, investigate and remediate misconduct.” (ASIC, RG 000.308)

ASIC’s view is for Superannuation services to develop their own in-house remediation capabilities and NOT outsource this to external service providers. 

What tools are available for remediation and compliance?

A consumer remediation process requires a lot of time, effort and staff. Managing this effectively is difficult - particularly if you don’t have the right tools and processes. 

That’s why we created Remediation Pro®, the industry-first solution designed to make in-house remediation simple for financial services businesses.

Scalable and configurable for each different remediation project, your team can properly investigate and remediate the clients that have suffered loss as a result of the advice they received. 

Every remediation project is different, in nature, scale and complexity. Remediation Pro allows you to set up each Remediation Project accordingly. There is no one size fits all process. Knowing this, we have designed Remediation Pro to be configurable by you when you first set up a project and even during the project you can calibrate the workflow to suit your needs.

Want to learn more about Remediation Pro®?

At Causia®, our aim is to provide you with the tools to easily stay compliant and efficiently manage customer processes, all while keeping your clients at the focus. 

To see Remediation Pro® for yourself and how it applies to your business, book a demo today.

Our team will take you through the software and all of the customisations and configurations available to you. 

Click here to book yours today.