ASIC has this month unveiled two landmark reports—REP 801 and REP 802—shedding light on systemic gaps in complaints and internal dispute resolution (IDR) processes in the financial services industry. Of note, ASIC found that 1 in 6 complaints were not even identified or recorded by insurers, and further, that all 11 general insurers detailed in REP 802 failed to fully comply with RG 271’s delay notification requirements.

The reports serve as a wake-up call for the general insurance and broader financial services sectors to address systemic shortcomings—and rebuild consumer trust. Indeed, ASIC plans to publish firm-level complaints data in 2025, letting the public compare IDR data across firms—and adding a very practical impetus for providers to rapidly address any weaknesses in their complaints and IDR processes.

1. Scope of the Reports

REP 801 provides a granular analysis of IDR data across the whole financial services sector, including insurance, superannuation, banking, and advice, over a 12-month period from July 2023 to June 2024. It focuses on complaint volumes, resolution timelines, and outcomes, setting a baseline for future firm-level data publication in 2025.

REP 802 examines general insurance complaints specifically, analyzing complaints data from 11 insurers (including Allianz, QBE, RACQ and Youi). It evaluates these insurers’ compliance with enforceable obligations outlined in Regulatory Guide 271 (RG 271) concerning internal dispute resolution (IDR).

2. Key Findings

REP 801: Industry-Wide Findings

• Complaints Volume: Over 4.7 million complaints were lodged across the financial services sector during the reporting period, averaging over 12,800 complaints daily. General insurance accounted for 33% of these complaints, followed by banking (22%) and superannuation (5%).
• Resolution Timelines: 76% of complaints were resolved within five business days, while 74% were resolved within one day. Life insurance had the lowest same-day resolution rate at 51%.
• Remedial Outcomes: The most common outcomes involved explanations or apologies (43%) and service-related remedies (39%). Only 13% of complaints resulted in monetary compensation, totaling $375 million across 623,555 cases.
• Nature of Complaints: Service issues dominated (45%), followed by disputes over charges (22%) and transactional problems (11%).

REP 801: General Insurance-Specific Findings

• Complaint Volume: General insurance registered 1.56 million complaints, driven largely by service quality concerns and premium pricing issues. Motor vehicle, home building, and home contents insurance were the most frequently cited product lines.
• Monetary Remedies: Insurers paid out $108 million in monetary remedies for general insurance-related complaints, reflecting systemic dissatisfaction in claims handling and pricing transparency.
• Top Complaint Causes: Premium increases were a leading cause of dissatisfaction, followed by disputes over claim denials and delays in claims processing.

REP 802: General Insurance Compliance Findings

• Complaint Identification Failures: Perhaps the most damning statistic across the reports (in our view): 1 in 6 complaints were not identified or recorded by insurers, “denying customers the important consumer protections of the IDR framework”.
• Timeliness Gaps: Not one of the 11 insurers fully complied with RG 271’s delay notification requirements. Non-compliance rates varied significantly, with some firms breaching these requirements up to 75% of the time.
• Claims-Handling Issues: Motor vehicle insurance accounted for 56% of claims-related complaints, with disputes over liability assessments and repair timelines among the key pain points.
• Monetary Remedies: Over $108 million in monetary remedies were provided, reflecting systemic dissatisfaction with claim outcomes.

3. Industry Reactions

David Locke, Chief Ombudsman and CEO of AFCA, welcomed ASIC’s inaugural IDR data report, noting, “This data provides valuable insights into how financial firms are handling consumer complaints and highlights areas where improvements are needed to ensure fair and timely outcomes for consumers.”

The Insurance Council of Australia acknowledged the need for improvement, noting that while some insurers have made progress, others must enhance their complaints handling processes.

4. Our take: what can you do about this?

1. Take a holistic view. Providers should not solve for merely minimising complaint metrics, but rather address complaints within a broader risk management framework. This includes regularly assessing complaint trends as leading indicators of other operational shortcomings within the business.
2. Implement Proactive Compliance Tools. Invest in intelligent tools – whether built or bought – to automate the tracking, categorisation, and resolution of complaints. Take human error or oversight out of the equation. Be thoughtful (or seek advice) about what to look for / how to do this. For instance, you could flag specific types of high-risk complaints, or focus on those escalated to EDR (e.g., through AFCA) which may indicate structural problems with your IDR.
3. (As required) review Internal Dispute Resolution (IDR) Processes. Depending on the maturity of your firm, you may wish to conduct a one-off in-depth review of current IDR processes to ensure they align with RG 271 requirements. This includes ensuring all complaints are identified, logged, and categorised accurately, even those received through informal channels like social media or verbal communication.
4. Integrate ‘Voice-of-the-Customer’ Programs. Again, depending on the scale of your business, you may consider establishing ‘feedback loops’ through post-resolution surveys or similar. Sometimes, customers’ biggest ‘pain points’ can be a relatively easy fix.
5. Build in the right ‘controls’. Don’t leave things to chance. In addition to leveraging tracking tools, consider other controls to mitigate risk. For instance, schedule regular training for frontline and complaint-handling staff on RG 271 requirements and IDR best practices. Or, conduct regular internal audits of complaints data to identify gaps in logging, resolution times, and compliance with obligations. Reporting of these can be included in your standing Board or Risk & Compliance Committee agendas, making them ‘BAU’ for your business.

Ultimately, ASIC’s reports underscore systemic challenges within Australia’s financial services sector, particularly in general insurance. Given increasing regulator activity, heightened consumer expectations, and intensifying public scrutiny, we think providers must commit serious mindshare (and investment, as needed) to closing any gaps.

If these reports and the growing spotlight on complaints has given you pause, please reach out. We would love to discuss how we could help you become a market leader in handling customer complaints – and avoid becoming another gloomy data point in a regulator report.