The Australian Banking Association has accepted the recommendation of a review of the Banking Code Compliance Committee that the committee should name banks in its code compliance reports.
ABA chief executive Anna Bligh said the industry supported the proposal, which was a recommendation of last year’s Cameron Ralph Khoury review of the BCCC, as long as it had certainty about consistency of reporting to the BCCC.
Speaking at the Banking Code Compliance Committee Forum yesterday, Bligh said there were anomalies in the way code breaches are reported. For example, one bank might report a breach that affects 10,000 customers as a single breach, while another bank might report 10,000 breaches.
“Once we have settled that issue we will move to reporting on a name basis,” Bligh said.
Cameron Ralph Khoury said “organisation-identified” reporting is now the norm for regulatory and quasi-regulatory reporting in the financial services sector, including in AFCA and ASIC reports, and should be extended to the BCCC. Bligh said the ABA accepts this.
Cameron Ralph Khoury made 19 recommendations in its review, which was released last December. Of those, 10 were more procedural in nature and are already being acted on by the BCCC, which has a review dashboard on its website.
The other nine recommendations called for changes to the code and are in the remit of the ABA. So far, the ABA has made no formal response.
Some of the other recommendations in the ABA’s hands include extending the BCCC’s power to report matters to ASIC and introducing a power to make referrals to the Australian Financial Complaints Authority.
The review also recommended that the BCCC have the power to compel a signatory bank that has been named by the BCCC to publish the fact of its naming on its website, with information about the cause and impact of a breach and its corrective action. The ABA will also have to agree to adopt this measure.
Bligh said the ABA had delayed its response to the Cameron Ralph Khoury review because it was also considering the recommendations of the Independent Review of the Banking Code of Practice, which was conducted by economic consultant and former senior Treasury official Mike Callaghan and was also completed last December. Callaghan made more than 100 recommendations.
She said the ABA had accepted a “high number” of Callaghan’s recommendations and would be issuing a formal response by the end of this month.
A key recommendation of the Callaghan review is that the commitment banks give that they will comply with their obligations under the Banking Code of Practice should be strengthened to include a commitment that they will have in place appropriate frameworks and systems to support compliance with the code, and the effectiveness of these frameworks will be subject to audit.
Callaghan said a key challenge in strengthening the effectiveness of the code is the attitude of some banks, which see it as no more than a regulatory burden.
Another key recommendation is that the code needs to provide greater clarity about enforceability under the code.
The review said: “The code is currently oblique in references to enforceability of code provisions. The ABA chef executive says the standards of behaviour and service set out in the code are ‘enforceable rights for consumers’. There is no explanation in the code how they can be enforced.
“To overcome misconceptions, the code should have a specific reference as to how all the provisions in the code can be enforced.”
BCCC chief executive Prue Monument said the implementation of the Cameron Ralph Khoury recommendations which are within the BCCC’s remit would clarify the committee’s role and reduce duplication in breach reporting processes.
Overall, Cameron Ralph Khoury found that the BCCC’s work “provides the Australian community with valuable assurance of the level of compliance.” It also said the committee has an important role in promoting higher practice standards in the industry.
But it said that with so much recent change in finance industry regulation and supervision, including ASIC’s power in relation to approved industry codes, banks are required to report much more information about complaints and breaches to ASIC, leading to overlap with their reporting to the BCCC.
It said: “A particular issue for the BCCC will be to revisit the data and other information that banks must report to the BCCC twice yearly. While this work must aim for efficiency for banks and the BCCC, it must also meet the needs of other stakeholders and the primary importance of the data collection enabling the BCCC to provide credible assurance to the community as to banks’ compliance with the code.”