The corporate regulator has found “indicators of significant compliance issues” over the way some superannuation trustees are managing their internal dispute resolution (IDR) schemes, potentially placing them in breach of rules that commenced last year.

About 48% of complainants who should have been issued an IDR delay notification were not sent one, according to an Australian Securities and Investments Commission (ASIC) surveillance survey of 35 trustees overseeing 38 funds.

New enforceable requirements in Regulatory Guide 271 Internal Dispute Resolution that took effect on October 5 last year mandate that a delay notification should be sent when a superannuation complaint – excluding death benefit distribution complaints – takes more than 45 days to resolve.

In relation to response timeframes, the survey found 2.7% of the total IDR responses were sent after the 45-day maximum timeframe generally required under RG 271. Of these, seven funds sent out 10% or more of their IDR responses after 45 days.

ASIC says it is concerned that trustees may be over-applying the limited exceptions to the maximum timeframe or not sufficiently monitoring how long complaints take to resolve.

The corporate regulator is also concerned with how complainants are being informed of delays. RG 271 requires trustees to notify complainants of delays and their right to go to the Australian Financial Complaints Authority when a written response to a complaint is not sent within 45 days.

“However, ASIC’s review found that in such circumstances, complainants were not notified nearly 50% of the time,” the regulator said.

Another area of concern relates to the recording of complaints. RG 271 requires trustees to record all member complaints and overall funds recorded complaints at a rate of 30 for every 10,000 members.

However, 10% of the funds that ASIC looked at recorded less than 10 complaints for every 10,000 members.

“This is significantly lower than the overall rate,” ASIC said. “ASIC is concerned that the low complaint rate may be a result of some trustees failing to record all member complaints or adopting an inappropriately narrow definition of ‘complaint’.”

ASIC Commissioner Danielle Press says dispute resolution is an essential part of the consumer protection framework in Australia and that a trustee’s approach is a meaningful measure of whether they are focused on the interests of their members.

“It also indicates the maturity of the trustee’s approach to risk,” Ms Press said. “When done well, dispute resolution can benefit trustees by helping build members’ trust and confidence.”

She says the first stage of ASIC's surveillance about internal dispute resolution practices of trustees has identified some problem areas that “need fixing”.

“We want trustees that have fallen behind to strengthen their internal dispute resolution arrangements to make sure that member complaints are handled in an effective, fair and timely way,” she said.

ASIC says its next stage of the surveillance will check how relevant trustees among those reviewed are addressing the concerns identified so far and closely examine a smaller sub-set of trustees.

The corporate regulator says it will also consider regulatory action where appropriate, and intends to communicate the outcomes once the surveillance is complete.

Click here for the snapshot of complaints handling by superannuation trustees.