Complaints management reform: a new responsibility for Lloyds Coverholders and DCAs

Significant changes to complaints management obligations are approaching for Lloyds Coverholders and Delegated Claims Administrators (DCAs), bringing new regulatory responsibilities and increased accountability for customer dispute resolution outcomes.

From 1 July 2026, Lloyds Coverholders and DCAs will become directly responsible for managing their own External Dispute Resolution (EDR) complaints, including matters referred to the Australian Financial Complaints Authority (AFCA) and OAIC etc. Responsibility for Internal Dispute Resolution (IDR) obligations will follow from 1 January 2027.

More than a process change

This is not simply an administrative change. It represents a significant shift in regulatory accountability and operational responsibility.

Organisations will be expected to demonstrate:

• Effective management of AFCA and other EDR complaints
• Well-prepared, evidence-based submissions and representation
• Compliant and defensible IDR responses
• Appropriate governance, oversight and reporting frameworks
• Consistent complaint handling aligned with regulatory expectations

For many Lloyds Coverholders and DCAs, these obligations introduce new compliance risks, operational demands and resource requirements that may not currently exist within their organisations.

The importance of operational readiness

Establishing a compliant complaints management framework requires more than documented procedures. It requires the right combination of expertise, governance, oversight and operational capability.

Key considerations include:

• Access to personnel experienced in complaints investigation and dispute resolution
• Processes aligned to regulatory and industry expectations
• Appropriate governance and reporting structures
• The ability to manage AFCA matters effectively, including submissions and conciliations
• Scalable resources that can respond to fluctuating complaint volumes

As implementation dates approach, organisations should assess whether their current operating model is equipped to meet these evolving obligations.

Building capability or leveraging existing expertise

There is no one-size-fits-all approach to meeting the new requirements. Some organisations may choose to build and maintain internal complaints management capability, while others may look to leverage established expertise and infrastructure.

What remains critical is ensuring complaints are managed consistently, fairly and in accordance with regulatory expectations, while delivering positive customer outcomes.

Organisations should consider whether they have access to:

• Experienced IDR and EDR specialists
• Established complaint handling and investigation frameworks
• Austrlian regulatory knowledge and governance expertise
• Resources capable of managing complex AFCA matters
• Reporting and oversight mechanisms that support compliance obligations

Preparing for the transition

The upcoming changes present an opportunity for organisations to review their complaints management framework and ensure it remains fit for purpose in an increasingly regulated environment.

As an AFSL-licensed organisation, Sedgwick has an established complaints management capability supporting both Internal Dispute Resolution (IDR) and External Dispute Resolution (EDR) matters, including complaint investigations, AFCA submissions, conciliations and regulatory reporting requirements.

With the transition dates approaching, now is the time for coverholders and DCAs to evaluate their readiness and determine the operating model that best supports their future obligations.

For organisations seeking support with managing IDR and EDR complaints under the new framework, Sedgwick can provide an established, scalable solution to help meet regulatory obligations while maintaining strong customer and compliance outcomes.