Welcome to Issue 22 of The Bulletin. In this edition:
Reviews of the CCMC and the Code of Banking Practice
Mr Phil Khoury, of Cameron Ralph Khoury, published the reports of the reviews of the CCMC and the Code on 20 February 2017.
The Australian Bankers’ Association (ABA) released its response to the Code review on 28 March 2017. The banking industry has accepted 61 of the 99 recommendations in full. There are 29 recommendations that it supports in principle or in part, and nine where it either needs more time to consider, or are not in a position to adopt.
The Code review made 20 recommendations directly related to the CCMC and its operations. The industry supported 16 in full and 4 in principle or in part.
In the ABA’s Media Release, its Executive Director – Retail Policy, Ms Diane Tate said:
“While the Code has legal effect through subscribing banks’ terms and conditions, we have heard we need to do more to give customers confidence in the Code. That’s why the ABA will work with the Australian Securities and Investments Commission on approving the Code, and on giving greater powers to the Code Compliance Monitoring Committee.”
The ABA response states that:
“The industry will work with the [CCMC] on strengthening the governance of the Code. The CCMC mandate will be redrafted to make it clearer, ensuring there is greater awareness of, and understanding of, the CCMC and its role. The CCMC will have greater powers to monitor compliance and investigate breaches. The role of the CCMC will also need to be examined as part of working with the Australian Securities and Investments Commission (ASIC) on approving the new Code.”
The CCMC is currently developing its Work Plan and establishing budget requirements for 2017–18 and beyond. This Work Plan will demonstrate:
- how the CCMC plans to implement the recommendations made in the CCMC review, and
- progress towards a monitoring framework envisaged by the Code review, and which is now largely supported by the ABA and banking industry.The CCMC’s Work Plan will be published by 1 July 2017.
The Code review is part of the ABA measures to protect consumer interests, increase transparency and accountability and build trust and confidence in banks. The CCMC was required to arrange a review of its activities, coinciding with the review of the Code, to meet its Mandate obligations.
The CCMC’s Provision of credit Own Motion Inquiry
The CCMC published its Provision of credit Own Motion Inquiry Report in January 2017.
The Inquiry focused on unsecured credit and the CCMC found that banks generally have robust, and often complex, processes in place to assess applications for unsecured credit in compliance with the Code.
However, the CCMC did identify potential issues, including matters related to the collection and verification of current customer information.
Information provided to the Inquiry suggests that the majority of applications for unsecured credit are processed using automated systems. The CCMC has stated that up-to-date information regarding a customer’s financial position should be incorporated into the credit assessment, whether processed manually or by an automated system. The CCMC considers that having a full and current picture of a customer’s financial circumstances is fundamental to complying with the Code obligations.
The CCMC has made nine recommendations in its Report, which:
- support Code compliance, and
- can assist banks to continuously work towards improving standards of practice and service in the banking industry as anticipated by clause 3.1(a) of the Code.
The CCMC held its Annual Forum for banks on 2 and 3 March 2017 at Suncorp Bank’s offices in Brisbane.
The forum provides an opportunity for discussion between the banks and the CCMC on current and future Code compliance monitoring issues.
At this year’s forum:
- Phil Khoury presented on the reviews of the CCMC and Code.
- Diane Tate, ABA Executive Director – Retail Policy, provided attendees with updates on current regulatory inquiries and the ABA’s current program of initiatives (which includes the Code review).
- The CCMC held:
- a workshop on banks’ approach to Code breach reporting to try to achieve consistency and common understanding across the industry, and
- a session discussing issues around accessibility to banking, with the assistance of Paul Holmes from Queensland Legal Aid and Sharona Torrens from the Commonwealth Bank’s Indigenous Affairs team.
Remote Indigenous communities
The CCMC is currently developing a report on banks’ approaches to dealing with remote Indigenous communities. The report will highlight broad banking issues faced by these communities and share good practice in services provided by Code-subscribing banks.
We expect to publish the report by June 2017.
CCMC Investigations – key statistics
Between 1 December 2016 and 28 February 2017 the CCMC:
- Received nine new matters, which raised allegations of non-compliance with the Code related to:
- financial difficulty
- key commitments
- internal dispute resolution, and
- Finalised eight matters, including:
- one by Delegated Decision where the CCMC adopted a decision made by another forum that there had not been a breach of the Code
- one regarding an organisation that is not a Code-subscriber
- one where there was no further contact from the person making the allegation, and
- five where the consumer withdrew their Code breach allegation.
Further information about delegated decisions can be found in Guidance Notes 2, 3, 5 and 6.
2016–17 Annual Compliance Statement program
The CCMC is currently developing the 2016–17 Annual Compliance Statement (ACS) program. In light of the findings from the Code and CCMC reviews, this year the CCMC will be asking banks to provide a more detailed breakdown of Code compliance data and exploring the trends and emerging issues behind this data to fully understand:
- the level of banks’ compliance with their obligations under the Code
- areas of emerging Code compliance risk, and
- initiatives banks have taken to improve their compliance with the Code.
The CCMC will consult with banks on the development of the ACS in April 2017. The outcomes, including any emerging risks and identified good industry practice, will be discussed with key stakeholders directly and published in the CCMC’s Annual Report for 2016–17.
Engagement with stakeholders is important for the CCMC to help inform its compliance monitoring program and raise awareness of its activities.
In addition to its Annual Forum, CCMC Committee members and staff have:
- Met regularly with banks and the ABA to discuss Code compliance issues, remote Indigenous communities and the Code and CCMC reviews.
- Consulted with Phil Khoury on matters related to the reviews of the CCMC and Code.
- Attended the Financial Counsellors’ Association of Queensland conference in Port Douglas.
- Presented at the Responsible Lending and Borrowing Summit in Sydney.
- Attended the ASIC Annual Forum for 2017 and met with ASIC for its quarterly liaison meeting.
The CCMC’s Compliance Manager
The CCMC will be saying farewell to its Compliance Manager, Robert McGregor, on 7 April 2017. Robert has been with the CCMC since 2011 and we are grateful to Robert for his diligence in managing the Committee’s work and liaising with Code-subscribers, while also providing valuable guidance and support to all stakeholders.
We will announce his replacement in due course.