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 puts the interests of consumers at the heart of every stage 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 designed to be scalable to all remediation programs regardless of size and complexity.
The Field Guide has been informed by 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.
ASIC has stressed that the Field Guide is not to be construed as a checklist and expects remediation programs to be tailored to suit consumers’ circumstances, lives and needs.
Characteristics of a consumer-centred remediation
- Consumers are at the heart of all decisions
- Fair in all circumstances
- Timely without compromising quality or generating subpar outcomes for consumers
- Comprehensive understanding of the issues and the affected consumers
- Consumers are returned, as close as possible, to the position they would otherwise have been in
- Complexity minimised and consumer action limited
- Consumers given the benefit of the doubt and erring in favour of the consumer
- Tracking and monitoring with outcomes recorded against the goal
- Adaptive and continuous learning
- Well documented throughout the entire process
Applicability to various stages of remediation
The main goal for any remediation 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 looks like at various stages of a remediation. We have distilled the key points for each phase in the table below.
|Scoping||Understanding the nature and extent of the problem||This phase entails an understanding of the problem itself and which consumers are potentially affected.
How to identify the issue at hand
Assessing the population of affected consumers and extent of potential loss
Working in tranches
To increase efficiency, licensees should aim to work in tranches once consumer cohorts have been determined, and prioritise consumer groups as appropriate.
No consumer should be disadvantaged 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.
|Understanding the 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 everything else that the consumers are navigating in their lives.
Licensees should draw on information that is accessible both internally and externally (e.g. data insights about consumers in multiple areas). Any expertise in consumer or behavioural insights as well as marketing should be leveraged to help interpret that information.
|Pause and reflect||Identifying any knowledge gaps||This stage involves identifying any knowledge gaps and working out how those gaps may be filled.
Decisions to rely on beneficial assumptions may be made. Any assumptions used should benefit the consumer(s) and be tested and monitored.
|Reflect on overarching goal||Licensees should incorporate tools, early on in the remediation timeline, to regularly track and measure progress against the overarching goal (i.e. 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 journey involves minimal consumer action.
Factors to consider in the design of consumers’ journeys include:
|Prepare an overarching communications plan||The plan should be formulated on the basis of the consumer journeys that have been mapped out and what is known about the affected consumers.
The following should be included in the plans:
|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:
|Test and Track||‘Soft launch’ for large/complex remediation programs||What is a ‘soft launch’?
A process to test the effectiveness of the approach with a small, mixed group of consumers (not only one specific group) prior to a full rollout to all consumers.
What are the benefits?
This phase should be factored into the planning and timeline of the remediation as a whole.
|Learn and adapt||Apply learnings, including those from any testing, to ensure continuous improvements to consumer journeys, communications and internal processes|
|Keeping good records||Record of testing performed can demonstrate the methodology and the corresponding outcomes|
|Monitoring progress and effectiveness||How to monitor outcomes appropriately
|Sharing learnings||Learnings obtained from a remediation may inform other remediation programs within the organisation|
Proposed updates to RG 256
Separately, ASIC is seeking feedback in relation to the 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
Submissions are due on 26 February 2021. The consultation paper (Consultation Paper 335) can be accessed here.