The Banking Code Compliance Monitoring Committee (CCMC) has made the following submission to the Australian Banking Association’s consultation about a new industry Guideline on supporting customers experiencing vulnerability.
The independent Banking Code Compliance Monitoring Committee (CCMC) has announced its Inquiry into banks’ compliance with the Guarantee protections set out in the 2013 Code of Banking Practice.
The Inquiry was prompted by the increasing number and severity of breaches by banks of the guarantee protections in the Code and the case studies cited in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
The CCMC invites and encourages individuals, small business customers, and their representatives to engage with us in this Inquiry, to share any insights, case studies and areas of concern or to provide any general feedback.
The CCMC is interested to hear from all and can be contacted by email firstname.lastname@example.org or by telephone on (03) 9099 2295.
Information about the CCMC is available on its website, www.ccmc.org.au.
Code Compliance Manager
Banking Code Compliance Monitoring Committee
(03) 9099 2295
The Banking Code Compliance Monitoring Committee (CCMC) has made the following submission to the Australian Securities and Investments Commission (ASIC) in response to Consultation Paper 309 – Update to Regulatory Guide 209: Credit licensing: Responsible lending conduct.
Topics covered in this issue of the Bulletin:
- Code transition and CCMC Forum
- Family law issue flags a transition reminder
- CCMC takes tough action over direct debits
- In the pipeline for the CCMC
- We encourage and rely on broad community engagement
Code transition and CCMC Forum
1 July 2019 marks the launch of a new Banking Code of Practice and a new name and Charter for the independent committee that monitors compliance with the Code.
The Code Compliance Monitoring Committee (CCMC) will become the Banking Code Compliance Committee (BCCC) and its new Charter will give it broader jurisdiction and greater powers to consider Code breaches. The BCCC webpage is at: bankingcode.org.au
As transition nears, the CCMC is developing guidance for banks and establishing the BCCC’s operating procedures. A critical part of this process was the CCMC’s two-day forum in March, which brought together senior banking representatives, the ABA, ASIC and consumer and small business stakeholders.
The Forum offered consumer advocates a chance to lay out the needs of customers under the new Code (2019 Code); examined issues facing small business, Indigenous Australians and vulnerable customers; considered a future under an ASIC-approved Code; and looked at how bank executives can set a course toward better practices.
Banks discussed transition issues and shared their approaches. They also heard that beyond meeting formal requirements, obligations under the 2019 Code will require them to empathise with customers and live the spirit of the new Code.
Family law issue flags a transition reminder
Recent CCMC investigations regarding clause 40 of the current Code of Practice highlight one way banks can broaden their approach to the protections built in to the 2019 Code.
Clause 40 of the current Code requires subscribing banks to possess guidelines setting out the way they will “deal with applications for transfers of mortgage and consents to transfer of title pursuant to a Family Court determination or approval; and, otherwise enforce debts affected by a family law property settlement”. They are required to publish these on their website.
In August 2018, the CCMC audited compliance with clause 40 and found that four banks did not appear to post the guidelines. Each bank acknowledged it had breached clause 40 and three stated that although they had once published such guidelines, these had dropped off their websites in 2013-14 during the transition period to the current Code. Each bank uploaded new guidelines concerning family law proceedings to its website and took steps to prevent the breach recurring.
The CCMC reminds banks that the transition process to the 2019 Code is wide-ranging. The process should capture the entirety of the 2019 Code – including provisions carried over from the current Code – and not focus solely on new requirements.
The obligation to maintain published guidelines concerning family law proceedings is not specifically included in the 2019 Code, but the CCMC encourages banks to continue to do so after 1 July. It considers it an opportunity to address clause 38 of the 2019 Code, where banks commit to take extra care with customers experiencing vulnerability.
CCMC takes tough action over direct debits
The CCMC has actively monitored compliance with direct debit obligations since 2008 and has continually found banks to be non-compliant. Recent investigations have sparked tough new measures aimed at addressing compliance levels the CCMC has found to be “unacceptable” and “indicative of systemic non-compliance”.
Under clause 21 of the current Code, banks must take and promptly process a customer’s instruction to cancel a direct debit. Banks are not permitted to direct or suggest that the customer should first ask the relevant merchant or service provider to cancel the direct debit, although banks can suggest that the customer also contact the merchant or service provider.
In October 2017, a CCMC report into direct debit requirements made recommendations aimed at improving practice and compliance. A mystery shopping exercise in February 2018 showed some gains, but a follow-up in October found bank staff provided non-compliant information 49% of the time.
The CCMC believes banks are not taking adequate steps to improve compliance and has written to the CEOs of several banks outlining its concerns. The letter required them to provide a plan for remediation, including the actions they will take to improve compliance within six months, details of how each bank will monitor implementation, and the name and position of the person directly accountable for implementing and overseeing this plan. It also warned that the CCMC is considering naming them for non-compliance with the Code if compliance rates do not improve significantly.
The CCMC has also written to the other subscribing banks to request a remediation plan from banks whose results were below the CCMC’s expectations.
In the pipeline for the CCMC
In May 2019, the CCMC will begin a two-part inquiry into guarantees obligations: an initial data collection to review policy and process and understand consumer experience, followed by an in-depth audit of guarantees. The CCMC plans to engage with consumer groups and other stakeholders in June 2019 and invites contributions from anyone with relevant information. They should contact CCMC Compliance Manager, Donna Stevens at: email@example.com.
The BCCC will follow up the 1 July adoption of the 2019 Code with an inquiry into whether banks have taken the necessary steps to develop and implement appropriate policies, processes, procedures and system changes to ensure Code compliance. The BCCC will publish the outcomes of this inquiry in September 2019.
Financial difficulty inquiry (Part Two)
Work continues on the second part of the Financial Difficulty inquiry. With a focus on vulnerable customers the CCMC will address, natural disasters, proactive identification of customers in financial difficulty, and the treatment of joint debtors, guarantors and small business and agribusiness customers.
The CCMC is scoping a research project into training to identify best practice principles for banks.
Important changes ahead for Compliance Statements
In July 2019, the CCMC will require banks to complete a final Annual Compliance Statement (ACS) regarding their compliance with the 2013 Code. The outcomes of this will be published by December 2019.
The 2019 Code brings a new reporting regime, requiring banks to report compliance data every six months.
We encourage and rely on broad community engagement
The independent committee that monitors compliance with the Banking Code of Practice welcomes, indeed actively invites, input from relevant stakeholders, whether it be banking management and staff, customers, consumer advocates or the community. As well as examining complaints and accepting contributions to ongoing inquiries, the CCMC (and soon-to-be BCCC) is keen to hear about emerging industry trends, feedback on Committee recommendations and other relevant matters.
Codes of Practice are an important part of the consumer protection framework that complement law and regulations and encourage industry practice that exceeds minimum standards. Broad engagement with the Code also builds trust between banks and the wider community.
Interested parties should contact CCMC Compliance Manager, Donna Stevens at: firstname.lastname@example.org.