Strata Manager s Complaint Procedures

Level 29, Chifley Tower, 2 Chifley Square, Sydney 2000 PO Box 6542 Baulkham Hills Bus. Centre 2153 Tel: 1300 880 494 Fax: (02) 9225 9943 E-mail: crmstrata@crmbrokers.com.au Strata Manager s Complaint Procedures 1 COMPLAINTS AND DISPUTES As well as being a specific licence obligation, 1 having robust processes and systems for dealing with complaints and disputes is an essential part of good business practice. Both the Corporations Act and the General Insurance Brokers Code of Practice require licensees to have a fully documented process for handling complaints and disputes with retail clients and to belong to an external dispute resolution scheme such as the Insurance Brokers Disputes Limited (IBDL). 1.1 What is a Complaint or a Dispute? A complaint is an expression of dissatisfaction with a product or service provided by a licensee where the complainant expects the licensee to take action to correct the situation and to prevent it from happening again. If the complainant is not satisfied with the licensee s action in response to the complaint, it may then become a dispute. Disputes that are not resolved need to be referred to an external dispute resolution scheme. Complaints should not be seen as a nuisance or a cost, but as an opportunity to obtain feedback from clients about a product or service experience. Licensees should use them as a way to assist them to rapidly and inexpensively change products, service style and market focus to meet clients needs, maintain clients confidence and continuously improve service and relationships with our clients. TIP A dispute is a complaint which is not satisfied and is pursued by the client. 1.2 Complaints and Disputes Policy Licensees should adopt a policy and procedures that demonstrate commitment to resolution of client complaints and disputes. The material in this section may be used as the basis for these. The person responsible for managing complaints (referred to in the Gold Book as the ) should regularly review the policies and procedures to ensure that they are relevant and up-to-date. 1.3 1.3.1 Appointment 1 s912a(1)(g) CA 133 Alexander St Crows Nest NSW 2065 G.05/25 Solent Circuit Baulkhams Hills NSW 2153 Level 8 / 350 Collins St Melbourne Vic 3000 CRM Brokers Pty Ltd ACN 088 887 138 ABN 68 088 887 138 AFS Licence 246622

Licensees should appoint a person to be responsible for client service matters, including: Dealing with and attempting to resolve all client complaints; Managing all disputes with clients; Advising clients of their rights to lodge complaints with an external dispute resolution scheme, if they are dissatisfied with the outcome; Liaising with the external dispute resolution scheme; Identifying possible systemic problems that may require procedural changes or staff training; and If the licensee holds a binder(s), referring client complaints to the insurer and/or the Insurance Ombudsman Service (as appropriate). A specialist complaints person or an operations manager (if properly qualified) may be the appropriate person for this role. The role could be given a suitably customer-friendly title, such as Customer Service Manager. The role may be a close fit with that of Privacy as privacy complaints need to be dealt with in a similar manner. It is recommended that a senior manager be responsible for dealing with all disputes, unless the volume is such that this is impracticable. Licensees with more than one office location should: Nominate a person in Head Office as overall who will liase with the managers of other locations in case of a client complaint; or Nominate a person in Head Office as "senior" and appoint a Client Complaints in each location who must manage complaints in that location and report to the senior. Whatever method is adopted, licensees should ensure that they have a corporate approach to complaints handling, otherwise the client will lose faith in the organisation. Licensees should also make sure that clients do not get the "run around". If the licensee chooses to have only one for all its operations, it should ensure that clients do not have excessive costs on interstate telephone calls. 1.3.2 Back Up It is also important to nominate a back up for the if they are not in the office. It is essential that problems be dealt with quickly and efficiently, and it is not acceptable for a delay to arise because staff are on leave. 1.3.3 Qualifications The should have: At least three years experience in insurance and/or broking so they are able to determine if the broker has acted reasonably. It is important to maintain an objective and impartial view regarding a complaint and not jump to conclusions; A knowledge of insurance broking at least equivalent to Tier 1 of ASIC Policy Statement 146. If they are put in a position where they are offering advice, this is a minimum standard; Broking experience and familiarity with all relevant insurance products offered in the market-place; A reasonable understanding of insurance law. It is preferable that they have completed some insurance and/or law studies as they must be able to determine if the intermediary acted according to obligations required by law; Familiarity with the licensee s internal administration system and operations and the different responsibilities of each department / staff member; Familiarity with the requirements of the Australian Standard on Complaints Handling (AS 4269-1995) and ASIC Policy Statement 165; Familiarity with the requirements of the IBDL, the Insurance Brokers Code of Practice and the licensee s internal disputes handling procedure; and Good interpersonal, negotiation and communication skills.

1.3.4 Authority The will require: Access to senior management whenever needed; Sufficient authority to resolve complaints to an agreed level; and Authority to implement remedial measures, such as retraining. A who is continually overruled in the interests of individuals within the organisation will be ineffectual. It is not good client service if the has to continually refer to a superior in order to clarify a situation, seek approval to make certain offers, or to obtain agreement to conciliate between the licensee and its client. The should be authorised to offer the complainant a solution to the problem. The nature and extent of the s authority to offer recompense or solutions should be clearly defined, even though the solution offered might vary depending on circumstances The solutions might include as appropriate: Apology; Goodwill gift or token up to a specified value; Waiver of fees or commission; Payment of compensation up to specified amounts; Technical assistance; Provision of information; or Referral. TIP Authority does not mean being uncooperative to the complainant and perhaps even trying to intimidate the client. On the other hand nor should the offer to make payments to the complainant simply in order to "accept their view" and thus maintain the image that there is nothing wrong. It is also recommended that licensees include provision for any such payments in their annual budget. 1.3.5 Resources The will require: The licensee s internal Complaints Policy and Procedures; Copies of the IBDL guidelines, the General Insurance Brokers Code of Practice; Information about and/or access to information about other complaint facilities (i.e. the Insurance Ombudsman Service), consumer advice bodies and current complaints matters discussed in the insurance industry. These can be obtained from: o Legal firms who issue regular newsletters; o The local consumer advice bureau; o Solicitors specialising in insurance matters; o Seminars conducted by industry organisations such as NIBA, AILA and the Insurance Institute; o PI broker and insurer; A user friendly complaints handling environment, i.e. low noise level and interview facilities; Facilities to record and store information on complaints; and Access to all levels of the organisation as required to solve a complaint. 1.3.6 Notification to IBDL IBDL requires its members to nominate a complaints manager, or customer relations officer to make decisions regarding client complaints or disagreements. This person acts as IBDL s contact person and is required to complete the Compliance Checklist and submit it, and an Annual Complaints Report, to IBDL. 1.3.7 Communications There will be times when a complaint is accompanied by a threat of legal action or media publicity. In this event, the will need to liaise with the licensee s internal legal department or external lawyers.

Potential liability issues should be notified to the licensee s professional indemnity broker or insurer as soon as they become apparent. 1.3.8 Internal Complaints and Dispute Process The following table suggests a system for dealing with and reporting client complaints and disputes, and the timeframes within which they should be dealt with. Consider this system and timeframes to ensure that they suit your operation. 2 The timeframes set out here are the maximum advisable. Licensees may wish to reduce the timeframes for internal purposes to ensure that they comply. Step Who Timeframe Attempt to resolve the client s concern. For example if a correction is required to be made to the records or a simple apology is sufficient. Complete a Complaints Form and note the action that was taken. Inform the about any client complaint that the broker is unable to resolve by providing information or explanations. If the complaint concerns privacy, notify the Privacy (if they are not also the ). Contact the client to obtain further information about the complaint and inform the client about the options available to them. Notify the Manager responsible for handling professional indemnity matters about the complaint. Consider whether the matter could give rise to a claim and whether to notify the professional indemnity insurer and/or seek legal advice (in order to establish privilege for further documents created). Send a letter to the client acknowledging the complaint, advising what is being done about it and requesting further information if necessary. Investigate the complaint and devise a solution. Telephone and correspond with the client to achieve resolution. If problem resolved, confirm with the client in writing. If the problem cannot be resolved: Advise the client of the reasons for the outcome; - Advise the client of the courses of action available to them, i.e. to take the complaint to an external dispute resolution scheme; and - Notify the Manager in charge of handling professional indemnity matters.- If the problem is not resolved, again consider whether to notify the professional indemnity insurer. Respond to the s requests for information. If the cannot resolve the matter within 20 working days and the matter is referred to IBDL: Respond to the IBDL s requests for information; and Take any action required by IBDL. Staff member concerned Staff member concerned Staff member concerned Staff member concerned Manager in charge of handling PI matters Manager in charge of handling PI matters. All managers contacted by the Client Complaints Immediately Immediately Immediately Immediately Within 24 hours of initial complaint Within 24 hours of initial complaint Within 2 days of initial complaint Within 3 days of initial complaint Within 4 weeks of initial complaint No more than 4 weeks after initial complaint No more than 4 weeks of initial complaint Within 4 weeks after initial complaint (unless the policy is due to expire, in which case before expiry) Within 3 working days Within 3 working days or the time required by the EDR body 2 For further guidance on the standards available, see the Australian Complaints Handling Standards - AS4269-1995 published by Standards Australia, 1 Crescent, Homebush, NSW 2140 and Competency Standards published by Insurance Training Australia Ltd, 3/31 Queen Street, Melbourne, VIC 3000.

1.4 Staff Guidelines To encourage good client service, complaints which cannot be resolved immediately should be referred immediately by staff to the so they can contact the client. Licensees should train all staff and representatives in the elements of complaint handling. Encourage staff to regard client complaints, as an opportunity to ensure that the client feels important and appreciated and to demonstrate the licensee s commitment to excellent service and respect for its clients. The objective should be to turn the client s frustration into satisfaction. Also, depending on the complaint, nonaction may result in an errors and omissions claim at a later date. There are certain steps that licensee s staff should always follow when speaking to a complainant. These include: Listen to what the complainant has to say; Empathise with the complainant, without making admissions; Never blame the complainant, or another person or department in the organisation; If the complainant has poor communication skills, offer them the opportunity to have an interpreter or representative speak on their behalf; Obtain the full facts. Write them down and read them back to the complainant. Ask the necessary questions in a polite and even-handed manner to obtain the most detailed response; Confirm the information received to ensure that it is correct; Attempt to resolve the problem with an explanation or information; Ask the complainant if they are satisfied; If the complaint cannot be resolved immediately, tell the complainant that there is a person in the organisation who is dedicated to resolving client problems and that the matter can be referred to them to see if they can help the client further. Seek to obtain the client s agreement to this. Tell the client the name of the and that the will contact them within 24 hours; Immediately complete a Form, and provide it to the, or the back up if not available; and Keep the complainant informed of the progress of the complaint. Don t wait for them to make contact. When a client complains, staff and brokers should: Try to remain calm even in the most demanding situations. Help the client maintain their control, no matter how angry they are; Treat the client courteously and fairly at all times; Be convincing in their expressions and actions to earn client trust; Listen to the client while they are not always right, a dissatisfied client is a liability, not an asset; Be patient if the client communicates poorly. Help them to get their meaning across; Understand when to say "no" and be firm without antagonising the client. Always say, "Thank you"; Explain why you appreciate the reasons for the complainant calling; Apologise for the mistake; Promise to follow up on the problem immediately; Ask for the necessary information; Correct the mistake - promptly; Check client satisfaction; and Prevent future mistakes. When it is not necessary to deal with a complaint or dispute Licensees do not have to deal with a client complaint or dispute if: They have given the client a written request for further information and the client has not provided sufficient information to enable them to properly consider it; or The substance of the complaint or dispute has been considered in the past (by all available means).

1.5 Complaints to Authorised Representatives Any complaints resolution system must also be implemented in authorised representatives offices. Licensees should require authorised representatives to maintain a complaints register, and report all complaints to the. This register should be inspected during audits of authorised representatives. Any offer of settlement should be approved by the. The authorised representative is acting on behalf of the licensee and any admission may set a precedent for the whole organisation. This also prevents authorised representatives from offering financial inducements to prevent a complaint being notified to the licensee. 1.5.1 Information to Consumers Licensees must provide a summary of their internal complaints procedure to all clients when they first place business for them and on renewal and actively promote IBDL by advising the client verbally and in writing that IBDL offers advice. This can readily be achieved if it is included in the FSG. Copies of the General Insurance Broker Code of Practice and the IBDL Terms of Reference must be provided on request. Brochures are available from IBDL. Licensees should regard this requirement as a strategic marketing tool and an opportunity to let clients know that they care. 1.5.2 Accountability While the should be primarily responsible for dealing with complaints, management should: Regularly monitor and evaluate the s performance this can be done in conjunction with the statistical review; Report to the board on the outcome of the statistical review and the evaluation; and Have the complaints handling process independently audited from time to time (this can be done as part of the external audit required by ASIC. 1.6 External Dispute Resolution Scheme Licensees should attempt to minimise the occasions where complainants seek assistance from an external dispute resolution scheme. If the client has a fair case, refusing to acknowledge it will only create additional cost and impose on management time. This does not mean that licensees should submit to all customer demands to keep out of external dispute resolution schemes. Although there is a cost for all complaints handled by external dispute resolution schemes, an admission merely to avoid this cost could set a precedent for further complaints. 1.6.1 Insurance Brokers Disputes Limited Insurance Brokers Disputes Limited (IBDL) is a consumer service designed to handle complaints and help resolve problems between insurance brokers and other insurance intermediaries (e.g. underwriting agencies) financial services providers (other than insurance companies) and their clients. IBDL is able to handle complaints and disputes against insurance intermediaries regarding: Retail client policies unless the amount involved exceeds $50,000; Small business policies where the amount involved is less than $5,000. Where the amount at issue is more than these limits, it can handle the dispute if the insurance broker and its professional indemnity insurer agree to waive the limit. IBDL cannot handle disputes which are already the subject of legal proceedings. 3 IBDL has a two-step process for resolving disputes: Step 1 After the member s internal dispute resolution procedures have failed to resolve the dispute, the dispute may be referred to the IBDL General Manager who will attempt to resolve it by conciliation; and 3 See the Terms of Reference for full details of the scope of IBDL.

Step 2 If the General Manager fails to resolve the dispute by conciliation to the satisfaction of the parties, the General Manager is required to refer the dispute to the Referee for a final determination. The determination is binding on the member. The Referee may make orders and impose sanctions on the member. 1.6.2 The Insurance Ombudsman Service The Insurance Ombudsman Service operated by the Insurance Ombudsman Service Limited is a scheme for consumers aimed at resolving disputes between insureds and insurers, or claimants who have a dispute with another person s insurance company in relation to a third party claim. It also provides information on general insurance matters. Some underwriting agencies are also members of the Insurance Ombudsman Service Limited. The Insurance Ombudsman Service s process for resolving disputes consists of: Step 1 After the member s internal dispute resolution procedures have failed to resolve the dispute, the dispute may be referred to the Insurance Ombudsman Service s Case Manager, who will attempt to resolve it; and Step 2 If the Case Manager fails to resolve the dispute to the satisfaction of the parties, the Case Manager will refer the dispute to an Adjudicator, a Referee, or the Claims Review Panel for a final determination; Step 3: o Adjudicator Deals with non-complex cases where $5000 or less is in dispute and no fraud is alleged. If the matter is subsequently considered complex, it will be referred to the Claims Review Panel; o Claims Review Panel Conducts hearing of complex cases or for amounts of more than $5000; o Referee Conducts hearings of disputes where fraud is alleged. The determination issued is binding on the member, but not on the consumer. The consumer may choose to seek other remedies elsewhere. 4 The General Insurance Code of Practice 5 also requires insurers and their agents to: Have an internal process for resolving disputes between consumers and the insurer, its agents, investigators, assessors and loss adjustors; and Belong to an external dispute resolution scheme. 1.7 Record Keeping Licensees should establish a uniform system for recording all complaints and disputes whether they are resolved within their own internal dispute resolution system and/or referred to an external dispute resolution scheme. The system should record the following: A specific reference number for each complaint/dispute to assist identification; Date; Name of complainant; Method of complaint; Name of the adviser or staff member who provided services to the complainant; The product or service provided; All relevant insurance data (period of insurance, insurer, date of premium paid, dates of documents sent out, dates of communication with client, etc.); A summary of the nature of the complaint/dispute; Internal resolution; Deadline for implementing internal resolution; Status of internal resolution; Date the problem/implementation of resolution was last checked; 4 See www.iecltd.com.au for more information about the terms of reference and operation of the Insurance Ombudsman Service and the Claims Review Panel. 5 Clause 6.1

Any external dispute resolution steps taken; Deadline for external resolution; Status of external resolution; Is it a licence breach; Severity of breach; Date reported to ASIC; and Whether an Errors & Omissions report has been made. Licensees may wish to develop abbreviations for the information that they need to record. If each complaint is recorded in a coded form, it will be easy to prepare a report that provides meaningful, comparable data. The system can be a simple paper file or a more sophisticated computer based system. However, it is most important that it contains all the data licensees are required to collect and that is kept up to date. Using this system when recording complaints and disputes will assist to produce the Annual Complaints Report for IBDL (see below). It is important that data are accurately recorded, as this enables IBDL to identify industry-wide statistics that can be used to benchmark the licensee s performance against the industry average. 1.8 Analysis 1.8.1 Benchmarks Benchmarks are vital for the success of a business. Ideally, they should reflect increasingly good standards of operation and client relationships. Licensees should establish benchmarks and standards for handling complaints and disputes. At the end of each year, performance against these benchmarks can be reviewed to see how staff and brokers have performed against them, how and where they have improved and what requires further attention. The benchmarks set will vary according to the licensee s operation, but areas for consideration include: Average time taken to resolve complaints; Categories of complaint, such as clerical error, poor advice or poor service. The licensee should choose categories relevant to its business; Proportion of complaints that become disputes; Proportion of disputes resolved in the client s favour; Percentage of complaints successfully resolved without reference to the external dispute resolution scheme; Proportion of disputes referred to the external dispute resolution scheme; Proportion of disputes resolved by the external dispute resolution scheme in the client s favour; and Average cost of resolving disputes. Licensees should review their benchmarks regularly and adjust them to realistic goals. TIP Ensure that the goals are designed to encourage staff to seek out complaints rather than reduce client complaints, because this will define what the client wants. This will also prevent staff attempting to hide complaints, which in the long-term can be very costly. 1.8.2 Trend Analysis By regularly evaluating the complaints/disputes data, licensees will be able to determine the causes of complaints and in particular, whether they have a systemic or recurring problem. Licensees may find that they need to take remedial action, eg: Change organisational practices and procedures; Retrain brokers and/or staff; or Reassess client communications, e.g. FSG or Letter of Engagement. It is recommended that management review this data quarterly and that a copy of the review be provided to the Compliance and Risk Committee and be included in the papers for the next Board meeting.

1.9 Reporting 1.9.1 Internal Reporting The should prepare a report at least monthly (quarterly for small organizations) for the Board and senior management. The report could include an update on the current status of all outstanding complaints, disputes and claims. It is very important that systemic issues are identified and the process and measures for minimising recurrence are highlighted. If additional resources, such as staff or technology are required, this should be highlighted for a management decision. 1.9.2 Reporting to IBDL At the end of each calendar year, an Annual Complaints Report must be prepared for the period from January 1 to December 31. Following signoff by the Compliance and Risk Committee this report must be lodged with IBDL by 31 March the following year at the latest. Although IBDL might subsequently request specific information about certain complaints, the report only needs to provide statistical information and does not need to go into details of each complaint. 1.10 Review While the will be primarily responsible for dealing with complaints, management should: Regularly monitor and evaluate the s performance this can be done in conjunction with the statistical review; Report to the board on the outcome of the statistical review and the evaluation; and Have the complaints handling process independently audited from time to time (this can be done as part of the external audits required by ASIC).