REVIEW OF THE CODE OF BANKING PRACTICE Banking Industry To Form Consultative Forum Principle of fairness to be drafted into the Code, Extension to cover small business Sydney, 3 September, 2001: The Australian Bankers’ Association (ABA) is keen to see any debate on banking based on the facts. Sydney, September 3, 2001: The Australian Bankers’ Association (ABA) is to form a Consultative Forum as part of the substantial changes it will pursue in creating the second generation Code of Banking Practice, which will provide the framework to recognise and address the impact on many Australians of rapid and significant changes to the way banking services are provided. David Bell, ABA Chief Executive, said the improved self-regulatory Code, to be completed by the first quarter of next year, will be another down payment by the industry in addressing its social obligations. "The banking industry is taking more important steps as banks move to take up key recommendations made by the independent reviewer of the Code, Mr Richard Viney. "A principle of fairness will be drafted into the Code, it will be extended to cover small business, not just consumers, and a consultative forum will be formed." "The changes to be made to the self-regulatory Code will substantially improve the standards of disclosure and conduct which subscribing banks agree to observe when dealing with their customers. A clear and updated Code will benefit consumers and small business." "The Code of Banking Practice is currently under review with the aim of revising the standards to take account of the many changes in the banking industry that have occurred since the Code was first developed eight years ago." Mr Bell said one of the most important steps the industry has agreed to implement is the formation of a consultative forum. "The forum will lead to effective communication between the ABA, consumer, community groups and regulators, "he said. "It will help the ABA and its members to become even more responsive to the changing needs and concerns of the community, as well as to provide an avenue for consumer and community input into issues relating to the Code of Banking Practice." "The forum will also allow groups to have their views considered early and provide a means where the industry and the community can work together to understand issues and possible solutions." "Banks also agree it is crucial that the Code is extended to cover small business and our aim has been to treat consumers and small business the same under the Code, wherever feasible." Key recommendations in the Code review have been responded to positively by banks. The responses will see: A principle that banks will act fairly and reasonably toward their customers will be included in the Code; Consultative forum to be formed; Code extended to cover small business; Monitoring of banks’ compliance with the Code and accountability for Code breaches; A provision for a sympathetic consideration for customers suffering financial difficulties; Better information for prospective guarantors about the debt they’re guaranteeing; Code to be reviewed every three years. Mr Bell said these important initiatives form the backbone of the ABA’s response to the Issues Paper produced by Mr Richard Viney, the independent reviewer of the Code of Banking Practice. Mr 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. "There are still a couple of steps to go before the industry produces the second generation Code next year. Mr Viney has to present his final report and the new Code provisions have to be drafted. The drafting process will be inclusive of stakeholder views," Mr Bell said. Note for editors: Timeline - Review of the Code of Banking Practice May 2000 July 2000 March 2001 July 2001 Early September 2001 Late September 2001 First quarter 2002 Launch of Review Closing date for submissions on the code (some extra time allowed) Independent Reviewer produced Issues paper Closing date for submissions on the Code (some extra time allowed for consultation) ABA response to Issues Paper Independent Reviewer Final Report due Second generation Code launched 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 For Further Information Contact:   Heather Wellard ABA PR Phone: 02 8298 0411 Mobile: 0409 830 439   ENDS