You could be forgiven for not
knowing that banks have a
voluntary code of conduct.
And many of those that have
signed on have a poor compliance record.
A CHOICE shadow shop has found three-quarters of the 16 banks
surveyed had trouble following the code’s
direction to promptly process a direct
debit cancellation at the customer’s
Three banks told our shadow
shop callers they couldn’t help, five gave at
least one response that wasn’t best practice
and another four charged a $10-15 fee.
While charging a fee is not strictly
breaking the code, it will discourage
consumers to make use of the code’s
provision. Only four banks fully followed
the code when talking to our two callers.
A revised Code of Banking Practice,
which further strengthens consumer
protections, comes into effect on 1
February 2014. But our shadow shop
shows it’s doubtful that it will be as
effective as it could be. And not all banks
have signed up to it. For example, Bank
of China, Macquarie and Arab Bank are
only signatories to the very basic 1993
code. ME Bank has not signed it, nor
the Mutual Banking Code.
Time to act
In 2008, the Code Compliance Monitoring Committee (CCMC), which shares the
office with the Financial Ombudsman Service (FOS), conducted a shadow shop
of all the banks that subscribed to the
code, enquiring about the cancellation of
a direct debit. Only 29% of calls complied
with the code.
Repeated exercises in 2010
and 2011 didn’t yield much better results:
only 33% of calls passed. CCMC advised the banks to provide
training and information to staff. In the
official review of the 2004 Code of Banking
Practice that led to the new code, it was also
suggested that staff be trained in this area.
Unfortunately these recommendations
weren’t included in the new code by the
Australian Bankers Association (ABA),
which cited a general training requirement
already included in the code.
CEO Stephen Münchenberg concedes more work needs to be done. “Bank staff need more information about the processes
involved to cancel a direct debit,” he says,
adding that they’re developing information
for both consumers and staff.
In CHOICE’s view, the bank industry’s inability to address breaches of a code that’s been in place for almost 10 years in a timely manner indicates self-regulation isn’t working.