Banking Code Compliance Monitoring Committee Bulletin – December 2017

Welcome to Issue 25 of The Bulletin. In this edition:

 

Banking Practice in Australia 2016–17 – the CCMC’s Annual Report

On 7 December 2017, the CCMC published Banking Practice in Australia 2016–17. This is the CCMC’s Annual Report and outlines how the industry met the obligations of the Code of Banking Practice in 2016–17.

The Report highlights:

  • Breaches of the Code self-reported by banks.
  • Data related to internal dispute resolution and requests for financial difficulty assistance.
  • The CCMC’s work related to the provision of credit, banking services for Indigenous customers and the cancellation of direct debits.
  • The independent reviews of the Code and the CCMC.

A summary of the CCMC’s key activities and findings for the reporting year is provided in the Year at a Glance section.

Further information:

Banking Practice in Australia 2016–17 – the CCMC’s Annual Report

Media Release: Annual report highlights risk areas and improved banking practice

Previous Annual Reports

 

Improving banks’ compliance with direct debit cancellation obligations

In October 2017, the CCMC reported that customers continue to be frustrated by bank staff providing incorrect information about cancellation of direct debits.

The CCMC found that more than half (54%) of bank staff tested gave customers incorrect responses to questions about cancellation of direct debits. It found that contact or call centre staff were more likely to offer compliant information than those in bank branches. The report was based on a small-scale ‘mystery shopper’ study, conducted in 2017, of 15 bank brands representing 12 banking groups.

The study follows previous research in 2008, in which 80% of staff responses regarding cancellation of direct debits were non-compliant, and 2011, when results improved slightly (66% non-compliance).

The CCMC will revise and intensify its compliance monitoring and reporting on banks’ direct debit obligations. The report makes seven recommendations to banks about cancelling direct debits including clear and simple guidance on bank websites, exploring ways to use online banking, and vastly improved communication and training of frontline bank staff.

Further information:

Report: Improving banks’ compliance with direct debit cancellation obligations (PDF, 580 KB, 18 pages)

Media Release: Fix direct debit problem now, compliance body tells banks

 

The CCMC’s focus areas for early 2018

The CCMC was due to conduct an Own Motion Inquiry examining banks’ compliance with their Internal Dispute Resolution (IDR) obligations in accordance with its 2017–20 Workplan.

The Treasury Laws Amendment (Putting Consumers First – Establishment of the Australian Financial Complaints Authority) Bill currently before parliament includes amendments to provide ASIC with powers to collect and publish IDR data. With the potential for policy changes should the Bill pass, the CCMC has cancelled its review of banks’ IDR processes at this time.

The CCMC is therefore scoping an alternative piece of work that examines banks’ compliance frameworks. Part of that work will include the collection of further information relating to the breaches reported during the 2016–17 period.

Through this Inquiry, the CCMC will seek to understand the causes of non-compliance with the Code and its impact on customers. A report with the CCMC’s findings is expected to be released in mid-2018.

In 2018, the CCMC also plans to:

  • review its approach to compliance investigations with a view to adopting a more risk based strategy towards Code breach allegations
  • continue to monitor banks’ compliance with the direct debit obligations, and
  • commence a follow-up inquiry into the financial difficulty obligations under the Code.

In addition, the CCMC is mindful of the major external developments that are likely to have an impact on its operations and those of Code subscribing banks in early 2018:

  • The release of the new Banking Code of Practice.
  • The Royal Commission into misconduct in the banking, superannuation and financial services industry.

The CCMC will continue to monitor these developments for any impact on its work.

 

Stakeholder engagement

During October 2017, CCMC staff met with each Code-subscribing banking group to discuss the outcomes of the 2016–17 Annual Compliance Statement program.

The CCMC also met regularly with the Australian Bankers’ Association (ABA) and the Australian Securities and Investments Commission (ASIC) to discuss its work program and ongoing developments regarding the new Code and the associated governance and compliance framework.

Among other things, CCMC staff and representatives also recently:

  • Attended the Annual Credit Law conference in Queensland.
  • Met with the Complaint Management & Advisory Unit of the Central Bank of Malaysia to discuss the CCMC’s monitoring program and how it contributes to the improvement of practices and service by banks.
  • Met with the CEO and the Director of Policy of the Australian Communications Consumer Action Network to discuss the Code and Code monitoring.
  • Met with a bank that is considering adopting the 2013 Code.
  • Provided training on Codes of Practice as part of the Financial and Consumer Rights Council’s (FCRC) CPD program at the FCRC Annual Conference.

 

CCMC Investigations – Key statistics

Between 1 September 2017 and 30 November 2017 the CCMC:

  • Received 13 new matters, which raised allegations of non-compliance with the Code related to:
    • key commitments (8 allegations)
    • financial difficulty (4)
    • chargebacks (2)
    • debt collection (1)
    • terms and conditions (1)
    • copies of documents (1)
    • internal dispute resolution(1), and
    • compliance with laws (1).

 

  • Finalised five matters, including:
    • three where the consumer withdrew their Code breach allegation.
    • two where there was no further contact from the person making the allegation.