A clean trail statement does not prove that the client base carries a clean complaint or compliance history. Before buying, a purchaser should have specialist advisers test the internal and external complaint records, incident and breach registers, remediation work, monitoring results and the allocation of responsibility between the seller, licensee, aggregator and representatives.

The purpose is not to treat every complaint as evidence of wrongdoing. It is to determine whether the records are complete, whether recurring issues were identified and fixed, and whether any open matter, customer remediation or regulatory response could affect the service workload, economics or transaction terms after completion.

Identify the responsible entities before counting complaints

A mortgage broker may operate under its own Australian credit licence or as a credit representative of another licensee. The complaint file may therefore be split across the seller’s CRM, the licensee or aggregator’s compliance team, an external dispute resolution portal, insurers and advisers. Start with an entity-and-record map showing who provided the credit assistance, whose licence and authorisation applied, who received each complaint and who retains the supporting file.

Section 47 of the National Consumer Credit Protection Act 2009 includes general obligations for credit licensees, including maintaining an internal dispute resolution procedure and taking reasonable steps to ensure representatives comply with the credit legislation. ASIC also states that a credit licensee’s dispute resolution system consists of compliant internal dispute resolution procedures and AFCA membership (ASIC — Credit: Dispute resolution).

Those obligations do not tell a buyer which liabilities or operational tasks transfer under a particular sale. Ask legal and compliance advisers to identify the responsible firm for each historical and open matter, and to test that position against the representative agreement, aggregator terms, sale structure and proposed client communications.

Request a joined-up evidence pack

Ask for records covering a defined period long enough to reveal repeat themes and delayed matters, not only a current open-case list. Subject to lawful disclosure, privacy controls and appropriate redaction, the pack should include:

  • the full internal dispute resolution register, including matters resolved immediately, withdrawn or closed without compensation;
  • complaint dates, products, issue codes, relevant staff, status, outcome, response times and payments or non-financial remedies;
  • all AFCA matters, correspondence, case status, outcomes, fees, determinations and continuing obligations;
  • incidents, breaches, reportable-situation assessments and ASIC lodgements, including decisions not to report;
  • customer remediation scopes, affected-population logic, calculations, payments, exceptions and closure approval;
  • compliance monitoring plans, file-review samples, exception results, repeat findings and corrective-action logs;
  • internal audit, external review, lender, aggregator or licensee findings relevant to the client book;
  • insurer notifications, threatened claims and legal correspondence made available through the agreed specialist process; and
  • policies, training records, supervision evidence and version histories applying when the conduct occurred.

ASIC’s RG 271 sets enforceable IDR standards and requirements, including how covered firms record and respond to complaints. ASIC also requires Australian credit licensees to submit IDR data every six months under its current IDR data reporting framework. A buyer should therefore request the submitted files or confirmations held by the responsible licensee and reconcile them to the detailed register rather than accepting a seller-prepared summary alone.

Reconcile the records instead of relying on one register

Complaint counts can be understated by classification or recordkeeping gaps. Select a period and reconcile the IDR register to AFCA case lists, customer-service inboxes, CRM flags, call escalations, insurer notices, remediation ledgers and incident or breach registers. Trace a sample both ways: from complaint to source file and outcome, and from a negative customer interaction or compliance exception back to the complaint register.

The definition and capture process matter. ASIC describes RG 271 as covering how firms record and respond to complaints; the buyer’s reviewer should test whether staff were trained to recognise expressions of dissatisfaction rather than recording only formal written demands. Compare the detailed data with the responsible licensee’s six-monthly IDR submissions and document timing, category and status differences.

For each sample, inspect the acknowledgement, investigation material, response, AFCA-rights wording where relevant, customer acceptance, payment evidence and closure approval. A “closed” status should not conceal an overdue payment, unimplemented process change or customer cohort still awaiting review.

Analyse patterns, root causes and remediation

Raw volume has limited meaning without context. Segment complaints and compliance findings by originator, lender, product, loan vintage, issue, outcome and month. Compare them with the number of active clients and relevant applications or settlements, while recognising that a low recorded rate can reflect weak capture rather than strong conduct.

Look for repeated themes such as poor explanations, unsuitable product comparisons, missing records, consent issues, delayed responses or vulnerable-client handling. AFCA says consumer complaints can be a risk indicator for systemic issues, meaning an issue may affect people beyond the complainant (AFCA — Systemic issues). Ask whether each repeat theme triggered a documented root-cause assessment, broader population review and preventive control.

ASIC’s reportable-situations regime covers significant breaches or likely breaches of core obligations, certain prolonged investigations, gross negligence, serious fraud and prescribed misconduct; ASIC says reports are generally due within 30 calendar days after the licensee first has reasonable grounds to believe a reportable situation arose (ASIC — Reportable situations). The buyer should not decide reportability independently. A credit-law or compliance specialist should review the seller’s assessment dates, reasoning, lodgements and updates.

ASIC’s review of licensee practices found that poor incident and breach registers sometimes omitted key facts such as events, timeframes, losses, affected customers or root cause. It identifies a detailed, comprehensive register as better practice for identifying, recording and reporting matters, including systemic breaches (ASIC — Findings of reportable-situations review). Treat an undocumented verbal resolution as an evidence gap, not proof that no issue remained.

Separate historical exposure from future operating work

Create an exceptions schedule for every open complaint, AFCA matter, remediation population, regulatory enquiry, insurer notification and overdue corrective action. For each item, record the responsible entity, estimated work, document access, next deadline, decision authority, expected cost payer and any dependence on the seller or former staff.

Then ask transaction counsel to address, without assuming the answer, who responds after completion, who controls settlement discussions, who can access legacy files, how costs and recoveries are allocated, when insurers must be notified, and what cooperation continues after the seller’s handover. Warranties or indemnities are not substitutes for understanding the underlying cases, and their value depends on drafting, limits, exclusions and the counterparty’s capacity.

The buyer’s operating model should also allow for ongoing service work. A file-review backlog, incomplete remediation or recurring complaint theme can require senior compliance time, customer contact, data correction and monitoring even where the legal exposure remains elsewhere.

Use decision gates for specialist review

Before removing a compliance condition or finalising value, require specialist sign-off on four questions:

  1. Completeness: Do the different registers, submissions and source systems reconcile, with explained gaps?
  2. Cause: Were repeat issues investigated beyond the individual complaint, and was the affected population tested?
  3. Closure: Is remediation evidenced by completed actions, customer payments and control validation rather than a status label?
  4. Responsibility: Are open-case ownership, records, cooperation, insurance notifications and transaction protections documented for the actual sale structure?

Pause if the responsible licensee will not corroborate the seller’s extracts, material complaints appear only outside the IDR register, reportability decisions lack reasoning, file-review exceptions recur without corrective action, or remediation scope cannot be reproduced. These are matters for legal, compliance, insurance and transaction advisers. The commercial task is to make unresolved work and uncertainty visible before the purchase price and completion mechanics are fixed.

Sources

Disclaimer

This article provides general information only. It does not constitute legal, tax, accounting, financial, credit, valuation or other professional advice. Circumstances differ. Obtain advice from appropriately qualified advisers before acting or entering a transaction.