The Report of the Independent Review of the Code of Banking Practice has been published.
The reviewer has also published his Report of the Independent Review of the Code Compliance Monitoring Committee.
The Australian Bankers’ Association is expected to provide a full response to the report in March and aims to release a new Code by the end of 2017.
The Report of the Independent Review of the Code of Banking Practice 2017
The reviewer made 99 recommendations in the following areas:
New Code: language, structure and authority
He has recommended the Code be redrafted in a modern structure, based on key principles, in a plain-speaking style with fewer carve-outs and exceptions, and with supporting detail in linked Industry Guidelines.
Small business issues, including impaired loans
He has recommended better information for businesses applying for credit, more time to respond to changes imposed by banks, extending protections to small businesses in financial difficulty or whose loans are in default, access to valuers and accountants reports and improvements in access to dispute resolution.
Responsible lending and credit cards
He has recommended improved information and transparency for customers in the credit process. He also recommended some restriction on the way credit card credit is marketed and
provided, including a more responsible approach to credit limit increases and making it easier for customers to reduce or cancel their credit card accounts. He has also recommended some
changes to interest charging and payment application practices.
Borrower default
His recommendations are intended to help borrowers who are in trouble with their credit to be given a fair chance to put things right, that they have fair access to information that would assist them and information about adverse credit reporting made about them.
Joint account holders and guarantors
He has recommended some further enhancements to the Code for the benefit of guarantors. He has also recommended better protections for joint account holders (recognising issues that can arise particularly after a relationship breakdown).
Financial difficulty
He has recommended more effort in the area of prevention – to proactively identify customers at risk of financial difficulty and to offer them assistance to avoid their circumstances deteriorating.
Banking terms and conditions, fees, cancellations, direct debits and chargebacks
His recommendations for the Code address the overall approach by banks to setting fees and informing customers as well as day-to-day issues such as direct debits and recurring credit card payments.
Marketing and sales practices including insurance cross-selling
The recommendations cover customer practices in cross-selling (in particular, consumer credit insurance) and in lenders mortgage insurance.
Code Monitoring and Compliance
The reviewer recommended the Code Compliance Monitoring Committee be renamed the “Banking Code Monitoring Panel”.
The reviewer made 19 recommendations to ensure it focuses on public assurance through more visible, transparent monitoring – and adding value to the industry through a greater focus on good practice and continuous improvement.
There are 6 recommendations in the Report focused mainly on initiatives that the CCMC could take up ahead of a settled new Code and Mandate.
