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.
||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
- Work out the root cause, any underlying drivers and how to prevent it from happening in the future
- Draw on information and expertise from various business units within the organisation to fully understand and resolve the issue
- Consider whether it is more widespread than first expected
- Identify any common, underlying threads that led to the issue by analysing which products, services, systems, processes and people are involved and impacted
- Document the process to inform the cause of the issue, any knowledge gaps, and steps taken to resolve the issue
Assessing the population of affected consumers and extent of potential loss
- Cast the net wide
- Adopt an ‘if-not-why-not’ approach, i.e. what evidence is available to support the conclusion that a consumer is not potentially affected?
- Conduct testing to confirm whether all those affected have been captured
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:
- Minimising complexity for consumers and making it easy for them (e.g. refunds should be processed automatically where possible)
- Being mindful of the wider impact on the consumer and putting things in the context of other life events and tasks that are ongoing in their lives
- Being ‘fault tolerant’ – consumers should not be disadvantaged if they made a mistake (e.g. forgotten to respond within specific timeframes)
- Do not make assumptions as to the way consumers would react or behave in this journey
|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:
- Timing and frequency of contact – at a minimum, contact should be made at the start and end of the remediation (unless in a very simple remediation)
- What messages and information would be communicated, when and from whom
- What communication channels would be used that are appropriate to consumers’ circumstances and fit for purpose – in most cases, multiple channels should be adopted to convey key messages in order to maximise consumer reach and response rate
- Whether there are any calls to action (ideally none)
- What metrics to track and gather
- What testing is to be done on which pieces of communication and when
- Action plan for non-responsive consumers
- Central contact point for consumers to obtain additional support (e.g. translation services, financial counselling) and progress updates
|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:
- The purpose of each piece of communication and whether it needs to be tailored to specific circumstances (e.g. literacy and numeracy ability, language skills and age)
- Keeping any requests for consumer action to a minimum
- Be transparent about what has happened, the timing of the remediation, the amount of the refund and how it was calculated
- Whether it is an appropriate stage to include information on how to lodge a complaint
- Whether the contact details for access to additional support has been included
- Adopt simple language and short paragraphs; avoid legal jargon or unnecessary information
- Use behavioural insights where possible and appropriate but not in a way that suits business interests or applied as a ‘token gesture of consumer centricity’
|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.
- Helps refine the remediation, identify any issues and test knowledge gaps at the start
- Helps refine communications and internal procedures prior to the full launch
- Causes minimal delay (if any) to the remediation as a whole
- Helps save costs as the likelihood of having to revisit parts of the remediation is reduced
|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
- Identify and track meaningful metrics to record progress against the outcome goal – ‘Consumer outcome’ is always a key metric to track in any remediation regardless of size
- Regularly record these metrics
- Conduct an analysis of the data obtained to identify and resolve any issues, and assess the outcomes against the goal
- Document the outcomes and any key learnings
- Revise and add new metrics as the process evolves
||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.