NEW CODE OF BANKING PRACTICE

Bank customers to benefit from key industry standards on transparency, fairness, conduct and accountability

Sydney, 12 August, 2002: The Australian Bankers' Association today launched the new generation Code of Banking Practice which is the banking industry's customer charter on best banking practice standards.

Chairman of the Australian Bankers' Association (ABA), David Murray, said: "The Code sets out the banking industry's key commitments and obligations to customers on standards of practice, disclosure and principles of conduct for their banking services."

"It is a new generation Code and replaces the original Code of Banking Practice which was developed nine years ago. The Code has moved with the times to take into account the rapid technological changes that have revolutionised the banking sector."

"This self-regulatory Code allows competition and market forces to work to encourage even higher standards for the benefit of banking customers."

"Adoption of the Code will be a mark of quality and customers should be encouraged to check if their bank subscribes because it is a binding contract between a bank and its customers for which the institution will be held accountable."

"This Code becomes operational in August next year when individual retail banks will adopt these standards and their compliance will be monitored by an independent panel."

David Bell, Chief Executive of the ABA, said: "The new Code is the framework by which banks can recognise and address the impact on many Australians of the rapid and significant changes to the way banking services are now delivered."

"Many valuable contributions were received from many groups throughout the review. The new generation Code demonstrates that the banking industry is listening and responding to consumers, government, and community groups as well as reflecting commercial realities."
 
"The ABA member banks agreed it was crucial that the new Code be extended to cover small business and the aim was to treat personal customers and small business the same, wherever feasible."

"The Code is a valuable safeguard for these customers - it will benefit the customer and assist them have a better understanding of the standards the banks will follow in day-to-day banking, complicated financial transactions and even if the customer experiences financial difficulty."

Once a bank adopts the Code next year, it is explicitly committed to:

• act fairly and reasonably toward their customers in a consistent and ethical manner;

• establish, through the ABA, a Consultative forum to take account of community views about banking;

• extend the Code to cover small business;

• submit themselves to independent monitoring of their compliance with the Code and accountability for Code breaches;

• with customers’ agreement, to try and help customers suffering financial difficulties with their bank loan, overcome those difficulties;

• provide information on chargebacks on a disputed credit card transaction;

• ensure staff are trained to competently and efficiently discharge their authorised functions;

• ensure the Code is promoted and that copies are made readily available;

• comply with the ABA’s Transaction Services and Branch Closure Protocol;

• provide important and relevant information for prospective guarantors before they commit to guaranteeing someone else’s debt;

• review the Code every three years.

The Code comes into effect in August 2003, because banks need adequate time to change documentation, computer systems, update procedures and ensure staff are properly trained to ensure compliance with the Code.

This will be conducted simultaneously with banks' preparations for compliance with the Financial Services Reform Act which takes full effect in March 2004.

In May 2000, the Independent reviewer, Richard Viney, commenced the Review of the Code of Banking Practice. Over the course of the Review, there were many submissions received from community, industry and government.

"The drafting process for the Code has been inclusive of community views. The regular review every three years will ensure that the banking industry continues to constantly develop and improve the Code in response to industry conditions, business requirements and consumer demand," Mr Viney said.

"This Code has real teeth as I know of no other banking Code in the world that is enforceable as a contract by the customer."

The independent Australian Banking Industry Ombudsman, Colin Neave, said: "The Code is a positive initiative for bank customers and will greatly assist the dispute resolution work of the Ombudsman's office."

"I will have much greater guidance and support in reviewing a particular case, and it will help me decide whether a bank has observed good banking practice. I was pleased with the extensive consultation that Mr Viney employed in reviewing the Code."

The ABA Chairman David Murray thanked Mr Viney for his contribution as independent Code reviewer and also thanked all the individuals, groups, regulators, politicians and banks that made submissions to the Code review.

For further information contact:

Heather Wellard
ABA PR
Phone: 02 8298 0411
Mobile: 0409 830 439 

New Code of Banking Practice

Notes for editors

The original Code of Banking Practice was introduced in November 1993, to set standards of good practice which guide banks in their relationships with their personal customers.

Banks that have adopted the original Code (see next page) will adopt the new Code in August 2003, unless a bank indicates to the contrary.  Banks that are not members of the ABA are free to adopt the Code if they so wish.
 
For the new Code, there will be a Monitoring Committee which will report on compliance with the Code, conduct its own investigations, request banks to remedy breaches of the Code and in certain cases publicly name a non-compliant bank.

"The Code of Banking Practice - Launch Publication August 2002", "The Code of Banking Practice 1993" and "Frequently Asked Questions - Code of Banking Practice", can be down loaded from the ABA website: www.bankers.asn.au.

Independent reviewer, Richard Viney, started the review in May 2000 with a call for submissions on the Code. After receiving those submissions, Mr Viney produced an Issues Paper in March 2001.  Community groups, Federal and State Ministers, Government Departments, Regulators, individual banks and the ABA have all supplied submissions to the review.

All public Issues Paper submissions, including the ABA's response, can be found on the Review of the Code of Banking Practice website: www.reviewbankcode.com

Banks that have adopted the original Code of Banking Practice (1993)

Adelaide Bank Limited
AMP Bank Limited
Arab Bank (Australia) Limited
Australia and New Zealand Banking Group Limited
Bank of Western Australia Ltd (BankWest)
Bank of Queensland Limited
Bendigo Bank Limited
Citibank Limited
Commonwealth Bank of Australia
HSBC Bank Australia Limited
ING Mercantile Mutual Bank (Australia) Limited
Macquarie Bank Limited
National Australia Bank Limited
Primary Industry Bank of Australia Limited
St. George Bank Limited
Suncorp-Metway Limited
Westpac Banking Corporation

ENDS