ASIC will not proceed with a plan to extend the protections of the ePayments Code beyond individual consumers to small business, bowing to industry arguments that it would be a complex and costly change and that payment issues experienced by small business are of a different order.
The regulator has issued a response to submissions and initiated further consultation in a paper released this week (Report 718). It has scaled back the scope of its review in light of the fact that the future of the code was swept up in a broader government review last year - the Treasurer’s Review of the Australian Payments System
Its focus now is on “modest improvements”, leaving the “significant policy issues” to the Treasurer.
The ePayments Code is a voluntary code of practice that regulates electronic payments, including ATM transactions, online payments, BPAY, point of sale of sale transactions, credit and debit card transactions and mobile banking.
The key protection in the code is that consumers will not be liable for any unauthorised transactions on their accounts if they have taken reasonable precautions to protect their accounts.
Other protections include a requirement to disclose product terms and conditions and fees, a requirement to assist consumers to seek a return of funds mistakenly transferred to the wrong recipient and a requirement to handle complaints.
Changes proposed in the latest consultation include:• extending the code to transactions made using the New Payments Platform;• introducing a five-day deadline for “sending ADIs” to investigate whether there was a mistaken internet payment and send a request for returns of funds to the receiving ADI; • removing a requirement for annual reporting by code subscribers, replacing it with an extended power to conduct ad hoc monitoring; • the introduction of partial funds recovery; • clarification of the term “mistaken internet payment”; and • clarification of the meaning of “unauthorised transaction”.
On the five-day deadline, ASIC said a time limit should apply to underline the need for banks to act quickly.
Banking industry associations argued that rather than impose a rule, ASIC could “note best practice” but ASIC did not accept this view.
On the annual reporting issue, ASIC said: “ASIC does not consider that the value produced from the requirement for annual collection of unauthorised transaction data outweighs the burden on subscribers, particularly smaller entities.
“ASIC considers there is benefit in having tools in the code that allow us to choose our particular focuses, as the needs arise, in terms of code topics and particular segments of the industry. Extending the ad hoc monitoring power to other matters relevant to subscribers’ activities relating to electronic payments will allow ASIC to understand emerging trends and adapt the code as necessary.”
In earlier consultation, ASIC proposed to amend the code so that the mistaken internet payments process applies not only where there are sufficient funds available in the unintended recipient’s account to cover the payment, which is the current code position, but also where only a portion of the funds is available.
The idea is to get around the “all or