Banks will have to solve customer complaints a lot faster: ASIC

Banks will have to solve customer complaints a lot faster: ASIC

Banks and other financial firms will have to resolve complaints quicker under new guidelines revealed today by the financial watchdog, potentially offering relief in about 420,000 cases.

Customers who file a complaint with their bank could wait as long as 45 days for a fix, but after consulting with the industry, the Australian Securities and Investment Commission (ASIC) has decided that’s just too long.

Under new guidance, standard complaints will have to be fixed within 30 days once the updated rules come into effect.

“At this time of economic uncertainty, consumer access to fair and timely complaints handling is more important than ever,” Karen Chester said, deputy chair of ASIC.

“Making it right when consumers have suffered loss is an important way to stimulate ongoing consumer participation and trust in the financial system.”

But the changes won’t come into effect until late next year on 5 October 2021, despite the financial watchdog acknowledging the current 45 day timeframe is no longer appropriate.

“In our view, the 45 calendar day IDR timeframe for standard complaints was no longer appropriately balancing the interests of industry and consumers,” the regulator wrote in its report, ‘Maximum timeframes for internal dispute resolution’.

Ms Chester said the delay was brought about by the COVID-19 coronavirus and that the time will help get the changes up and running.

“While this extended timeframe reflects the impacts of COVID 19, publishing (the guidance) RG 271 now gives affected firms certainty and enough time to make systems and other changes necessary to meet the updated regulatory guidance,” she said.

The updated guidelines generally:

  1. reduce how long banks have to deal with complaints
  2. dictate what information should be featured so they can be escalated
  3. spell out what’ll happen to representatives who don’t act in the best interest of customers

It’s estimated most standard complaints are already dealt within the 30 day timeframe. Data on how banks deal with internal complaints is spotty, ASIC said, and so they estimated banks deal with about 5 million complaints a year at most.

Just more than 420,000 complaints take longer than 30 days to fix, ASIC estimates. The people waiting for an outcome on these cases maystand to benefit from the revised guidelines.
Adjacent industries will also have to follow revised guidelines from late next year. Superannuation companies, for instance, will have to resolve complaints within 45 days -- compared to the current 90 day expectation.

Still unhappy?

Among the most powerful ways to express dissatisfaction with a bank is to take your business elsewhere. Not only would it send a clear message, but it may also lead to you finding a better savings rate or an account with fewer fees. There’s no shortage of banks offering savings accounts and you can compare their offers here.

Customer rights were generally bolstered following 2017’s Royal Commission into the industry. A few years on and open banking is on the horizon, an initiative that gives people the authority to share their financial data with other firms. The idea is competitors eager for your business will tailor a solution that’s specific to how you spend and save money.

It’s still early days for open banking -- so far only two financial firms can receive data from the big four banks -- but another 70 have commenced the process of securing accreditation.

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Learn more about savings accounts

How do I open a savings account?

Opening a savings account is a relatively simple process. If you’ve found an account with a suitable interest rate, you’ll just need to get in contact with your chosen lender via a branch, phone call or hop online to begin the process. 

You may be required to provide:

  • Personal details, including identification (driver’s license, passport etc.)
  • Tax file number
  • Employment details

Can you direct deposit to a savings account?

Yes. You can make one off payments or set up regular direct deposits into a savings account. This can be organised easily through online banking or by making deposits in a branch. Talk to your lender to find out the easiest way for you to set up direct deposits.

Can I overdraft my savings account?

A lot of savings accounts won’t let you overdraw. Some will allow this feature but you’ll need to apply first. It’s best to read the fine print and check with your lender whether this is a feature they offer. It can be a helpful addition, but as your lender can charge you a fee as well as interest for going into negative numbers, it’s best to avoid overdrafting when possible.

What is the interest rate on savings accounts?

As banks frequently change their rates, the most accurate way to look at interest rates on savings accounts is to use a savings accounts comparison tool. When you look at the savings rate check what the maximum and minimum rates are. Often banks will offer you a promotional rate for the first few months which is competitive, but then revert back to a base rate which can sometimes be less than inflation. Ongoing bonus rates are often a safer bet as they will keep rewarding you with the maximum rate, provided you meet their criteria

How to open a savings account for my child?

Some banks and financial institutions allow parents to open a bank account for their child as soon as it is born, and start depositing funds to go towards the child’s future.

Children’s savings accounts generally don’t have fees, and are structured to help develop positive financial habits by limiting withdrawals, encouraging regular deposits, and earning interest on the savings, similarly to standard savings accounts.

How does interest work on savings accounts?

The type of interest savings accounts accrues is called compound interest. Compound interest is interest paid on the initial deposit amount, as well as the accumulated interest on money you have. This is different from simple interest where interest is paid at the end of a specified term. Compound interest allows you to earn interest on interest at a higher frequency. 

Example: John deposits $10,000 into a savings account with an interest rate of 5 per cent that he leaves untouched for 10 years. At the end of the first year he will have $10,512 in savings. After ten years, he will have saved $16,470.

How to make money with a savings account?

Savings accounts make you money by earning interest on your savings. The more money you deposit, the longer you leave it in the account, and the higher the account’s interest rate, the more interest you’ll be paid by the bank or financial institution, and the more your wealth will grow.

To make sure your savings account makes money and doesn’t lose money, it’s important to maintain a large enough minimum balance that the annual interest earned exceeds any annual fees charged on the account.

Can you set up a savings account online?

Yes. Several large and small banks offer online applications for savings accounts, and there are also online-only financial institutions to consider.

Online-only savings accounts are often less expensive than other savings accounts, though they may not offer the same flexibility, features, or face-to-face service as more traditional savings accounts.

How much money should I have in my savings account?

A good rule of thumb when working out a minimum balance for your savings account is to make sure that you’ll earn more in annual interest on your savings than what you’ll be charged in annual fees.

If you’re saving with a specific goal in mind, prepare a budget so the interest you earn on your deposits will help you efficiently reach this goal. Online financial calculators may be helpful here.

Can you set up direct debits from a savings account?

It’s not usually possible to set up a direct debit from your savings account to cover ongoing expenses or bills, as savings accounts are structured around growing your wealth by earning interest on regular deposits, and discouraging withdrawals.

Some transaction accounts allow you to set up direct debits and also earn interest, though you may not enjoy as much flexibility as a dedicated transaction account, or get as high an interest rate as a dedicated savings account.

Can you have a joint savings account?

Yes. Joint savings accounts can be useful for two or more people wanting to combine their savings to meet shared financial goals, including spouses, flatmates and business partners.

Some joint savings accounts require all parties to sign before they can access the money. While less convenient, this extra security can help encourage all parties to meet their shared financial goals.

Other joint savings accounts allow any of the account holders to access the money. These accounts can be convenient for financially responsible couples that trust one another implicitly. 

Who has the highest interest rates for savings accounts?

As banks frequently change their rates, the most accurate way to know who currently has the highest interest rate is to use a savings account comparison tool.

What is a savings account?

A savings account is a type of bank account in which you earn interest on the money you deposit. This makes it one of the easiest and safest investment tools.

How can I get a $4000 loan approved?

While personal loans and medium amount loans don’t offer guaranteed approval, there are steps you can take to help increase the likelihood of your application being approved, including:

  • Fulfilling the eligibility criteria (providing ID, proof of residency, proof of income etc.)
  • Checking your credit history (you can order one free copy of your credit file per year, and make sure that there aren’t any errors that may be bringing down your credit score)
  • Comparing carefully before applying (making multiple loan applications can mean having your credit checked multiple times, which can look bad to some lenders and reduce your chances of being approved by them)