Sydney, 13 November, 2006: The Australian Bankers’ Association’s (ABA) analysis of the Banking and Financial Services Ombudsman (BFSO) annual report 2005-06 shows positive results for ABA member banks.

David Bell, Chief Executive of the ABA, said: “Overall, I would be confident in saying that disputes fell for ABA member banks which is a pleasing outcome for this year.”

Another highlight is that a total of 93.6% of cases closed¹ were resolved by the financial services providers themselves after referral from the Ombudsman. This improvement reflects the efficient work of the BFSO office and prompt response by banks and other financial services providers.

This year saw a large fall in the number of BFSO investigations and reviews, down from 321 last year to 249 in the latest report.  Positive factors influencing this would be a decline in the more complex cases and improvements to early resolution rates.  Additionally, some cases may be taking longer to close.

It is important to note that comparing BFSO data across years is not simple because of survey differences. Additionally, banks’ data has been inflated as two financial services providers (non-banks) have been classified as banks for BFSO reporting purposes. (see over: Notes on the data)

When looking at the credit card data, there is evidence of a fall in credit card disputes over the past year. During this same time, transaction activity by customers on credit cards generally increased by 7% and new accounts increased by 8%.  (see over: Notes on the data)

Mr Bell said 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 will assist 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.” Mr Bell said.

*The BFSO Annual Report states - of the 6,336 cases closed in 2005-06,
1,191 were considered outside the Ombudsman’s Terms of Reference (OTR).

The ABA also notes that BFSO classifies two financial institutions (non-banks) as banks for purposes of their reporting.  These two BFSO members are not authorised to describe themselves as banks.  As such, this has inflated the number of disputes attributed to 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.
  
  
• To read the Code of Banking Practice – visit the ABA website: www.bankers.asn.au or free call the ABA on: 1800 009 180 and a copy will be mailed to you.

For further information:

Heather Wellard
Director, Public Relations
Phone: 02 8298 0411
Mobile: 0409 830 439

ENDS

¹Cases closed with outcomes, see page 13 of BFSO report