Taking a consumer-centred approach to remediation

In September, the Australian Securities and Investments Commission (ASIC) published its findings on the implementation of Regulatory Guide 277 (RG 277) remediation policies and procedures by major financial institutions.

Following the review, ASIC has called on licensees to strengthen their remediation procedures. Over the past seven years, failures in the financial services industry have led to over $7 billion in remediation for 8.4 million Australian consumers.

RG 277 provides guidance to licensees on how to properly handle remediation and it is expected that licensees consider ASIC’s latest review, and amend their policies, procedures, and practices where required.

ASIC RG 277 update

ASIC has reinforced that effective remediation starts with robust, consumer-centred policies and procedures. This provides licensees and their staff the confidence and ability to fully investigate an issue, discover the true root cause and scope of the problem, and respond effectively. ASIC has noted that incorrect remediation can be costly for both consumers and institutions who must redo remediations and repair reputational damage.

ASIC will consider regulatory action if licensees fail to meet RG 277 standards or remediate consumers promptly and fairly. ASIC also highlighted the following areas of focus:

Oversight and controls
Remediation review periods
Use of ‘beneficial assumptions’
Foregone returns or interest
Reasonable endeavours
Low-value payment threshold.

Independent expert reviews

An independent expert review is crucial for effective remediation. It provides an objective assessment free from internal biases. Independent experts bring specialised knowledge and an external perspective, uncovering nuanced and systemic issues.

ASIC often mandates such reviews but taking a proactive approach to engaging an independent expert will also demonstrate a commitment to transparency and accountability.

As an Independent Expert, BDO can identify root causes and make recommendations that will form the basis of rectification and remediation programs. Our range of senior specialists will apply a robust set of procedures and ensure completeness, quality, and depth to our reports.

Independent Assurance services

Independent Assurance experts can help to review the design and operating effectiveness of a financial institution’s remediation program. It is crucial for an independent assurance team to bring a well-defined methodology that reviews the accuracy and completeness of key areas such as governance, population, compensation, payments, customer communications, and record keeping.

BDO’s Audit and Assurance experts utilise Assurance Standard ASAE 3000 (Assurance Engagements Other than Audits or Reviews of Historical Financial Information). ASAE 3000 offers a structured approach to assurance engagements, ensuring a systematic and thorough evaluation of remediation efforts. It also emphasises independence and objectivity and the standard’s adaptability allows it to be tailored to specific organisational needs, making it a versatile framework for remediation program reviews.

Trusted ‘internal’ adviser

We also act as a trusted internal adviser for clients who are developing rectification action plans, other regulatory responses and related uplift activity— this will ultimately inform and become their remediation program and drive demonstrable and sustainable uplift.

How can we help?

BDO’s Audit and Assurance team has supported a number of large financial services institutions to help remedy failures, often through complex and challenging remediation programs.

We acknowledge that each client and remediation program is unique and will require a customised approach. We assess the specific needs of our clients and appoint a tailored team of audit and assurance professionals, regulatory change and program management professionals, and data analytics and organisational change management experts to de-risk remediation programs and uplift compliance.