When complaints tell a bigger story

A member complains about a delayed payment. Another raises concerns about incorrect fees. A third is frustrated by poor communication.

Individually, these might appear to be routine service issues. But what happens when they're all pointing to something bigger?

That's the question at the heart of ASIC's latest report, REP 844 – Lessons to be learned: How trustees use insights from superannuation complaints.

The report highlights concerning weaknesses in how superannuation trustees use complaints to identify systemic issues and prevent broader member harm.

And the findings suggest there is considerable room for improvement.

The warning signs are there. But are trustees seeing them?

ASIC examined complaints practices across 45 superannuation trustees, including a more detailed review of 10 trustees.

Almost a quarter of trustees were not regularly analysing complaints data to identify systemic issues, despite this being an enforceable requirement under ASIC's internal dispute resolution standards.

More than half identified fewer than five systemic issues over a two-year period. Fourteen identified none at all.

Perhaps most concerning, the Australian Financial Complaints Authority (AFCA) identified systemic issues from superannuation complaints at almost twice the rate of trustees themselves.

ASIC's message is that identifying very few systemic issues isn't necessarily a sign that everything is working well. It may simply mean the warning signs are being missed.

The report also found instances where trustees were too quick to attribute complaints to member expectations, awareness or error, rather than looking more closely at whether underlying processes, systems or communications were contributing to the problem.

It's not just about resolving the complaint

Trustees have been required to identify, investigate and address systemic issues arising from complaints since ASIC's Regulatory Guide 271 (RG 271) came into effect in October 2021.

But REP 844 reinforces an important distinction between managing complaints and learning from them.

Resolving an individual complaint addresses the immediate issue for that member. Understanding why the complaint arose, whether similar issues are affecting others, and what needs to change is where effective governance comes into play.

That requires more than maintaining a complaints register.

It means analysing complaints collectively, identifying recurring themes, investigating root causes and ensuring potential systemic issues are escalated and remediated.

It also means giving boards and senior management meaningful visibility of emerging risks, supported by clear accountability and evidence that corrective actions have been effective.

ASIC's review highlighted weaknesses in these areas, including gaps in oversight, assurance activities and the systems used to identify systemic issues.

Interestingly, the report also acknowledged positive examples of trustees adopting new technologies, including AI, to help identify patterns and potential systemic issues.

Technology alone isn't the answer, but it can play an important role in connecting information that might otherwise remain fragmented across different teams, systems and processes.

Turning information into meaningful oversight

There is also a broader lesson for superannuation trustees.

Complaints are one of many sources of intelligence that can help identify emerging risks. The real value comes from connecting that information to the wider governance framework and using it to inform decisions.

This is where technology-enabled oversight frameworks, such as 3Lines' Passport, can play a valuable role.

By bringing together relevant risk intelligence, monitoring activities and governance workflows, trustees can build a more complete picture of the licensees and advisers they interact with.

For example, complaints data could be considered alongside adviser risk profiles, advice review findings, regulatory information and other monitoring indicators to help identify emerging trends or concentrations of risk that might otherwise go unnoticed.

Rather than viewing each piece of information in isolation, trustees have an opportunity to use technology to connect the dots, identify where further investigation may be warranted and support a more proactive, risk-based approach to oversight.

Of course, identifying a potential issue is only the beginning.

Trustees still need to demonstrate what happened next: how the issue was assessed, who was responsible, what action was taken and whether the underlying problem was resolved.

As ASIC continues to sharpen its focus on member services, the expectation is increasingly clear. Trustees must be able to demonstrate not just that governance arrangements exist, but that they are effective in practice.

Because the real measure of an effective complaints framework isn't simply how many complaints are resolved. It's how much an organisation learns from them, and what it does differently as a result.