Sydney, 3 December, 2007: The Australian Bankers’ Association (ABA) analysis of the Banking and Financial Services Ombudsman (BFSO) annual report 2006-07 shows a positive outcome for ABA member banks.

David Bell, Chief Executive of the ABA, said: “Similar to last year, our analysis of the BFSO data indicates that this year disputes¹ fell for ABA member banks. This is a solid result for ABA members and reflects an improvement in their practices and dispute resolution services.”

BFSO data for cases where an outcome is determined² shows there has been a fall of 1.3% for ABA member banks. While across all financial institutions (including non-banks and other financial service providers) there was an increase of 1.5%.

Another highlight is the total of 93.4% of cases closed³ which were resolved by the financial service providers themselves after referral from the Ombudsman. This is consistent with the result from last year of 93.6%. These results reflect the efficient work of the BFSO office and prompt response by banks and other financial service providers.

It is important to note that comparing BFSO data across years is not simple because of survey differences. For example, this year 19 new BFSO members joined the scheme which brings the number of their members to 106. This compares to 87 BFSO members in the previous period. Most of the new BFSO members are non-banks.

When looking at the product data, there has been a fall in the number of disputes for all financial service providers compared to last year which relate to high volume transaction banking such as payment systems (ATMs, computer banking and periodical payments etc) and for deposit accounts (statement accounts, term deposits and cheque accounts etc). For consumer finance, there has also been a fall in the number of disputes compared to last year, but the ABA notes there was some variation across the products within this category.

Mr Bell said: “Considering the number of transaction accounts, the millions of customers and the billions of banking transactions completed each year, the results in the categories of payment systems and deposit accounts are particularly pleasing.”

Mr Bell added that the revised Code of Banking Practice is a clear signal that banks continuously work to lift their standards. The Code is a positive initiative for bank customers and assists the dispute resolution work of the Ombudsman’s office.

“We believe the Ombudsman has much greater guidance and support in reviewing a particular case, and the Code will help in the decision-making on aspects of good banking practice.”

Notes on the BFSO data:

• Comparing BFSO data across years is not simple. In recent years, new members have been added to the survey and, even when these new members are initially added, they may not participate for the full year.
• The ABA also notes that the BFSO classifies two financial service providers as bank members on page 47 of its annual report.  These two BFSO members are prudentially supervised authorised deposit-taking institutions but are not authorised to describe themselves as banks.
• To determine whether or not there have been ‘real’ increases in the level of disputes, it is necessary to address survey differences to ensure that we are comparing ‘apples with apples’. Furthermore, each year the number of customers in the financial services sector increases as does the number of transactions completed by those customers. BFSO data does not account for survey differences or changes in customers and transactions.
• Since the Ombudsman scheme was established in 1990, the Code of Banking Practice has been introduced and revised. The Code requires the banks to provide personal customers with a free, external and independent process for resolving disputes and has been expanded to cover small business.
• The Ombudsman is independent and is not employed by the banks, but by its Board, which has an independent Chairman, equal numbers of consumer and bank representatives. It is a non-Government scheme.

ENDS