Tag: ABA

The New Banking Code Is Simply The Minimum Customers Expect

Let’s be clear, the floating of the new banking code is not bad, but is really is still setting a low bar and contains elements which most customers would already expect to see. This is not some radical new plan to improve customer experience, rather more recognition of the gap between bank behaviour and customer expectation. And it does not HAVE to be implemented by the banks anyway.

There is much more work to do. For example, how about proactive suggestions to switch to lower rate loans and better rates on deposits?  What about the preservation of branch and ATM access? What about the full disclosure of all fees relating to potential loans?  And SME’s continue to get a raw deal thanks to lending policy and bank practice (despite the hype).

Then the biggie is mortgage lending policy, where banks current underwriting standards are set to protect the bank from potential loss, rather than customers from over-committing.

That said, this piece from the New Daily discusses the code and calls out some of the changes.

The year 2017 saw the big banks introduce a slew of measures, from scrapped ATM fees to new ethical codes, all intended to boost their battered reputation and fend off a royal commission.

In the end these measures were not enough, and in late November Prime Minister Malcolm Turnbull folded to political pressure and called a royal commission.

Nevertheless many of the banks’ voluntary measures will significantly improve consumer experience.

In particular, the new Banking Code of Practice, a list of consumer-centric reforms written by the banks themselves, will make a number of changes that consumers can use to their advantage.

Currently before the Australian Securities and Investment Commission for approval, the new Code is likely to include recommendations by the Australian Banking Association (ABA) that will significantly benefit individual consumers, as well as small businesses and guarantors.

The ABA said that included in the Code are key changes aimed at making banking more accessible and increase availability to consumers, alongside higher transparency and increased standards.

We’ve picked out some of the key changes that could benefit the average Aussie punter.

1. Online cancellation of credit cards

Currently credit cards can only be cancelled by a phone call or written request, but only after the balances has been paid or transferred. Direct debits that are not cancelled may reactivate a cancelled credit card. So knowing in advance what direct debits are applicable will prevent this happening.

Consolidating all credit cards into a debt consolidation loan will be simpler if the borrower can provide evidence of credit card cancellation, facilitated by online cancellation.

2. Notification of when payment defaults are reported to credit reporting bodies

With Comprehensive Credit Report becoming compulsory for the big four banks from 1 July 2018 there will be the obligation not only to share credit data with other credit providers, but also report positive credit behaviour.

Keeping track of defaults and exhibiting future positive credit behaviour will be advantageous to borrowers when applying for future loans, by increasing their credit worthiness.

3. Notification of introductory credit card interest free period expiry

Transferring the balance of a credit card to a low interest rate credit card can be a smart way to pay down credit card debt but only if this can be done within the interest free period. After the period expires the credit card interest rate can revert to a much higher rate, leaving the borrower in a similar position prior to transferring to a low interest rate card.

4. Proactively identifying customers who may be experiencing financial difficulty

Financial hardship assistance programs offered by banks will be improved as well as a new commitment for banks to proactively work with their customers in financial difficulty to help prevent a situation worsening.

5. Consumers can request a list of direct debits and recurring payments made on credit card and bank accounts

As mentioned previously a cancelled credit card can be reactivated by direct debits that have not been cancelled. As more and more payments are made by direct debits, customers are becoming further entrenched with their bank, and closing an account or transferring to another bank can become unfeasible if there is not an easier way of knowing direct debits and other payments.

6. Improved fee disclosure and waiving or refunding of some fees

The removal of fees to bank statements for customers who do not have access to electronic statements, and improved disclosure of fees will save consumers money and improve their ability to manage their finances.

Businesses will also benefit with more notice of changes to loans, and simplified loan contracts that are more easily understood.

Small Business and Family Enterprise Ombudsman Kate Carnell said she was concerned the code cannot be properly enforced.

“The committee will not be fully independent and banks won’t be obliged to accept its recommendations,” she said.

“The code stipulates only that banks will comply with ‘reasonable’ requests of the committee. This means effectively that banks will only act on recommendations if they feel like it. If they don’t think the committee is reasonable they have an escape clause.

“It’s like the umpire is appointed by the home team and they don’t have to accept the umpire’s decision.”

At the same time Ms Carnell welcomed the code’s “simplified language” and specific focus on small businesses.

ABA Floats New Banking Code

The ABA says that after hundreds of hours of development and more than 50 meetings with banks and key stakeholders over the past nine months, the new Banking Code of Practice has been sent to ASIC for approval.

The Australian Bankers’ Association CEO, Anna Bligh, said this is a huge step for the industry which has voluntarily introduced a new simplified, customer focused code.

“Banks are committed to change and the new Code is stronger, broader and written in simple to understand language. It has been completely rewritten to better meet community expectations and service the needs of customers,” she said.

“The industry has achieved the ambitious task of developing a new Code only nine months after receiving the final report from independent reviewer Mr Phil Khoury.

“The new Code has been broken into ten key parts, with four brand new sections including one dedicated to small businesses and another related to making banking more available for customers and easier to access.

“The remaining six sections represent a complete restructure of important parts of the current Code,” Ms Bligh said.

Some of the changes that Australians can expect in the new Code are more transparency around products and services, and a more prominent commitment to ethical behaviour.

This includes a new deferred sales model for consumer credit insurance on credit cards, small business contracts written in plain English, and the right to close a credit card account online. In addition, customers will be notified before their introductory credit card interest free period expires, the banks will introduce ways to proactively identify customers who may be experiencing financial difficulty and implement better safety nets for guarantors.

“The new code means we are making banking easier, by making changes to processes, providing customers with more info and introducing higher standards for how banks serve their customers.

“This new set of rules and behaviours will go a long way in addressing the expectations that Australians have of their banks.

“Banks most certainly do not underestimate the challenge ahead of them and will continue to make the necessary changes and improvements that their customers expect.

The fact that the industry has accepted 96 of the 99 recommendations in some form is proof that banks are serious about change, and are currently undergoing the greatest level of reform seen in the sector in more than 20 years.

“Banks value their customers and the new Code is one more step towards providing better banking for all Australians,” Ms Bligh said.

The Code is the first industry code to be sent to ASIC for approval and was part of major industry initiatives announced in April 2016 to raise banking standards.

WHAT’S IN THE NEW CODE FOR YOU?

For individuals

  • Customers will be informed when a bank reports any payment default on a loan to a credit reporting body, making it easier for customers to manage their finances.
  • On request, customers will be provided with a list of direct debits and recurring payments made on accounts. This can go back as far as 13 months and can assist customers with managing their accounts, avoiding dishonour fees and with switching.
  • Improved transparency around fee disclosure by telling customers, where practical, about transaction service fees immediately before they incur the fee, helping customers better manage their costs.
  • Waiving or refunding statement fees for customers who do not have access to electronic statements.

For small businesses

  • Small business customers will be provided with a longer notice period about changes to loan conditions or a bank’s decision on whether it will continue to provide the loan facility, which will help businesses with future planning.
  • Simplified loan contracts that are written in plain English and are easier to understand.
  • Improved communication and greater transparency by banks in the use of external property valuers, investigative accountants and insolvency practitioners.

For guarantors

  • Ensuring that guarantors are making an informed decision after taking time to consider the guarantee documents. Guarantors, who have not received legal advice, will be required to wait three days before signing, which may help customers avoid financial abuse.
  • Guarantors will be notified of changes to the borrower’s circumstances, including if they are experiencing financial difficulty.

Open Banking a Big Win for Consumers – ABA

From ABA.

A recent survey has found that Australians believe that banks are better at keeping their personal data secure than government agencies, online retailers or social media platforms.

And while men and women were fairly even, the Galaxy research found that those in regional centres trust their bank to protect their data even more than their metro counterparts (70 per cent regional vs 61 per cent for metro areas).

Those with the highest level of trust are aged between 40 and 49 years old.

Australian Bankers’ Association CEO, Anna Bligh said banks take data security and privacy very seriously, spending millions to ensure their systems are safe.

“With the introduction of Open Data across the Australian economy next year, consumer privacy and security is front of mind.

“Open banking will enable customers to get more value out of their data by opening it up to be easily shared with other banks and finance providers. In the future, a customer will be able to open their mobile phone app and with the touch of a button, direct their bank to transfer their data to another finance provider.

“Giving customers the ability to share their data more easily will help them to shop around for deals and get the best product for their needs.

“This represents a significant change from the current system and puts the power squarely in the hands of the customer, allowing them to decide how and when, or if, their information is shared,” she said.

Open data will also make comparing bank products and services easier as financial institutions standardise such things as terms and conditions and pricing.

Small businesses can also benefit from being able to share their transaction data with their accounting software packages. Bank transaction data could be tied to their invoices and receipts so businesses can readily track their finances.

The ABA will host its second Open Data Symposium today, aimed at continuing the discussion around the benefits to consumers and what the industry needs to do to prepare for the change.

The Galaxy research surveyed 1000 Australians online earlier this month for the Australians’ Attitudes to Digital Innovation & Data Security poll.

ABA Declares Progress On Bank Reforms

The Australian Bankers’ Association has welcomed the latest progress report from former auditor-general Mr Ian McPhee AO PSM, which has found that banks are on track regarding the six reform initiatives.

Mr McPhee stated that since the previous report, a number of initiatives are now being implemented, which is good news for customers and the industry.

Banks have already introduced three initiatives – the appointment of customer advocates who help customers resolve issues and proactively improve customer outcomes, the adoption of new whistleblower protections, and the conduct background check protocol when hiring staff.

The remaining three initiatives are showing good progress.

ABA Chief Executive Anna Bligh said it’s encouraging that the industry’s reform program is starting to gain traction and deliver real benefits to customers.

“Banks across the board are serious about change and rebuilding trust and confidence within the community. Introducing these initiatives will better protect customer interests and increase transparency and accountability,” she said.

“The banking industry is currently undergoing the greatest program of reforms seen in decades. It’s vital that the momentum continues, so banks can meet the needs and expectations of the community.

“The ABA appointed the former Public Service Commissioner Stephen Sedgwick AO to review how bank tellers and other customer-facing bank employees, their managers, and third parties are paid by banks. The industry adopted all the recommendations and are now in the implementation phase,” Ms Bligh said.

“The industry understands that through the combination of leadership, performance management, remuneration structures, behavioural standards and culture, a real difference is being achieved.”

Progress since the last quarter McPhee review includes:

* Adoption of best practice whistleblowing policies by 19 banks (last bank to finalise by end of year).

* The Code of Banking Practice is now with key stakeholders for feedback. The new Code is on track to be finalised by December 2017.

* Four banks have published their overarching principles on remuneration and incentives ahead of the December deadline.

“The determined effort that has delivered the reforms to date is set to continue in coming months as banks finalise their implementation of the industry’s Better Banking program,” Ms Bligh said.

A copy of Mr McPhee’s latest report is available at betterbanking.net.au.

ANZ CEO Shayne Elliott next Chairman of the ABA

The Australian Bankers’ Association today resolved to nominate ANZ Chief Executive Officer Shayne Elliott as Chair at its Annual General Meeting in early December.

Mr Elliott will succeed current Chair of the ABA, National Australia Bank Group Chief Executive Officer Mr Andrew Thorburn.

Commenting on the nomination Mr Elliott said: “The banking industry is working hard to build trust with customers, the community and with federal and state politicians on all sides. While we have made significant improvements in recent times, rebuilding community trust is a long-term issue and change within the industry needs to be bolder and faster.

“I look forward to making a positive and progressive contribution as the industry continues with the important task of delivering sustained change which delivers better outcomes for customers and helps rebuild our reputation.

“I would like to thank Andrew Thorburn for his stewardship of the ABA during this time and I look forward to building on his strong legacy of industry reform,” Mr Elliott said.

ABA Chief Executive Anna Bligh welcomed Mr Elliott’s nomination.

“Shayne has a long and distinguished career in banking and will bring considerable energy and commitment to the transformation process led by Andrew,” Ms Bligh said.

“The industry is currently undergoing the greatest program of reforms that banking has seen in decades. It’s vital that this continues and that we work to rebuild trust and better service the needs and expectations of the community,” she said.

By convention, the Chair of the ABA rotates between the Chief Executive Officers of the major banks. With the CEO succession announcement at the Commonwealth Bank in 2018, the next organisation on rotation is ANZ.

“For the sake of continuity it was decided to bring forward Mr Elliott’s term rather than seek an alternate chair,” Ms Bligh said.

“There are a number of reviews and reforms to be introduced in the coming year, so consistency is important. I am looking forward to working closely with Mr Elliott in his new role,” she said.

Mr Elliott’s term will begin after the ABA’s Annual General Meeting in December.

ABA Ups The Ante On SA Bank Tax

 

The Australian Bankers’ Association’s new website – jobsnottaxes.com.au – launched today, invites the people of South Australia to email local members of Parliament to take a stand against the tax.

“South Australia needs jobs to grow its economy, not new taxes that will undermine this objective,” ABA Chief Executive Anna Bligh said.

“Over the past 10 years, full time jobs in South Australia grew by an average of 0.2 per cent per year, compared with 0.9 per cent across Australia.”

A new statewide Galaxy poll (Galaxy surveyed 801 people in South Australia between 8 – 12 September 2017 via telephone and online) conducted this month shows that 52 per cent of South Australians oppose the tax compared with only 38 per cent who support it. Half of people surveyed believe the tax would negatively impact on jobs in the state.

The website also features new television ads with members of the South Australian community urging the Government to dump the tax and focus on jobs and growth.

 

“In 2016, the five banks impacted by the proposed tax paid around $1.5 billion in dividends to shareholders in South Australia and lent $10 billion to South Australians to buy their own home,” Ms Bligh said.

“This is a tax on all South Australians and will impact shareholders, customers and bank employees,” she said.

 

 

… As Does Westpac

All the major banks have removed foreign ATM fees. The ABA welcomed the move.

Statement from Anna Bligh, Australian Bankers’ Association Chief Executive:

“The ABA welcomes the announcement from the major banks today to abolish ATM fees.

“It’s a boon for customers and makes banking more affordable for everyday Australians.

“This is the latest in a suite of initiatives by banks to create better products and services for customers and boost customer choice, including reducing interest rates on credit cards and offering fee-free transaction accounts.

“A competitive banking system is good for customers and good for the sector.”

The BEAR Roars!

The Treasury released the exposure draft of the Banking Executive Accountability Regime, open for consultation until 29th Sept 2017.

The Bill amends the Banking Act to establish the BEAR: an enhanced accountability framework for ADIs and persons in director and senior executive roles.

  • The BEAR imposes a clearer accountability regime on ADIs and people with significant influence over conduct and behaviour in an ADI. It requires them to conduct themselves with honesty and integrity and to ensure the business activities for which they are responsible are carried out effectively.
  • It does this by creating a new definition of ‘accountable person’. An accountable person is a Board member or senior executive with responsibility for management or control of significant or substantial parts or aspects of the ADI group.
  • The general requirement placed on accountable persons is framed in the context of their particular responsibilities. These will be clearly defined in accountability statements for each accountable person and an accountability map for each ADI group.
  • Accountability maps and statements are designed to give APRA greater visibility of lines of responsibility. The maps will clearly allocate responsibilities throughout the ADI group, to ensure that all parts or elements of the group are covered.
  • An ADI must comply with its BEAR obligations. These include new accountability, remuneration and key personnel obligations. An ADI must ensure that it has a remuneration policy consistent with the BEAR, its accountable person roles are filled and it has given accountability statements and maps to APRA.
  • ADIs must set remuneration policies deferring an accountable person’s variable remuneration to ensure accountable persons do not engage in behaviours inconsistent with BEAR obligations.
  • APRA will have additional powers concerning examination and disqualification to let it implement the BEAR.
  • If an ADI breaches its BEAR obligations, significant civil penalties may be imposed by a court.
  • Recognising there are different business models and group structures in the banking industry, the Bill uses both high level principles as well as prescribed detail. The BEAR will work with existing legislative and regulatory frameworks

The ABA were unimpressed in a statement from Anna Bligh, Australian Bankers’ Association Chief Executive:

“The seven day consultation period announced by the Federal Government on new banking executive accountability laws is grossly inadequate and playing fast and loose with a critical sector of the economy.

“The industry recognises that improving senior executive accountability is crucial for customers to have trust in banks.

“Banks want to work with the Federal Government to get this right, but just seven days to consult is not good enough.

“This is a significant piece of reform that impacts on the integrity of banks and the stability of the financial system and it needs thorough scrutiny.

“It’s an entirely new addition to the system of corporate governance in Australia. The Government’s timeframe risks serious unintended consequences.

“The ABA urges the Government to extend the consultation period and do the proper due diligence to ensure that the objective of improving senior executive accountability is met.”

 

Low levels of trust, confidence and transparency in the banking industry – ABA

The Australian Bankers’ Association has today released new research that measures and tracks community trust and confidence in banks.

Less than one third of those surveyed had high levels of trust in the banking industry. This is below the international benchmark.

There are significant differences in attitude between those who have higher levels of trust, and those who do not. Those with low trust scores believed the banks were drive by profit, not focussed on customer needs and had terms and conditions which are not transparent.

The research conducted by international firm Edelman Intelligence will be used by the industry to assess the impact of the wide ranging reform agenda currently underway across the sector.

“The research shows low levels of trust, confidence and transparency in the banking industry with a clear need for improvement,” according to ABA Chief Executive Anna Bligh.

“Interestingly, survey respondents report stronger levels of trust with their own personal banking experience (53 per cent) than they do with the industry as a whole (31 per cent).

“This points to a real opportunity for banks to translate the experience customers have with their own bank into higher levels of trust in the sector as a whole,” she said.

The Edelman Intelligence research has also measured the community’s knowledge of current industry-led banking reforms and their views of these reforms.

“While awareness of the reforms is low, respondents have a clear view that the reforms are on the right track to improve banking culture and customer experience,” Ms Bligh said.

“It is heartening that while challenges lie ahead for banks, customers are receptive to banks’ massive reform program.

“As a result of more than 20 inquiries, reviews and investigations into banks in the past two years, Australia’s banks are now implementing one of the largest reform programs in their history.

“Along with Federal Government reforms such as the new Banking Executive Accountability Regime, a new one-stop shop for complaints and substantial improvements to contracts for small business lending, the industry has initiated its own reforms which include a new Code of Banking Practice, new whistleblower protections and changes to staff remuneration.

“It’s a big program of transformation and future benchmarking will look at the full breadth of changes that are underway,” Ms Bligh said.

Anna Bligh will today outline to the Good Shepherd Microfinance Conference in Melbourne the importance of measuring and benchmarking trust in banks.

“It is critical to the whole banking industry that real progress is made in rebuilding trust and respect with the community,” she said.

“The fact that this research has been done, that it is being set as a tangible benchmark and being made public, is an indication the banking sector is serious about reform and prepared to be held accountable.”

Key findings from the report include:

  • When asked to rate the importance of the initiatives in making banking better, each initiative scored between 62 and 75 per cent.
  • The initiatives that will have the greatest impact on trust are strengthening the Code of Banking Practice and changing the way bank staff are paid.
  • Respondents are most aware of actions their main bank has taken in relation to the removal of individuals from the industry for poor conduct (53 per cent), followed by a strengthening of commitment to the Code of Banking Practice (51 per cent).
  • Based on the 2017 Edelman Global Trust Barometer, Australians’ trust in the financial services sector has increased slightly, but is still four points behind the global average.

“Banks are trusted when they’re considered stable, well-regulated and reliable. This research shows just how much more work needs to be done before trust in bank culture and conduct reach stronger levels than seen in this research,” Ms Bligh said.

“The research will be conducted regularly to assess progress and identify areas for further reform.”

The Edelman Intelligence research consisted of an online survey of 1,000 Australians and 12 focus groups between May and June 2017. More information is available in the report.

SA to face High Court challenge over bank tax

From The ABA.

Australia’s major banks have resolved to mount a challenge to the SA bank tax if it is legislated, the Australian Bankers’ Association announced today.

“The South Australian Government will face a High Court challenge if it introduces its proposed bank tax,” ABA Chief Executive Anna Bligh said.

“South Australia is a state that needs to create more jobs and encourage businesses to invest, not introduce new taxes,” she said.

Recent polls of more than 2000 voters and 400 business owners in South Australia showed widespread opposition to the tax and concern about its impact on jobs.

“Banks are campaigning against the tax because it is not in the interests of South Australians, and they are prepared to fight it in court,” Ms Bligh said.

“Other states will also face a Constitutional challenge in the High Court if they propose to single out banks for new taxes.

“There is no justification for new taxes on Australia’s major banks. Banks are already the nation’s largest taxpayers, contributing $14 billion in taxes last year.

“On top of that, banks paid $26 billion in dividends to shareholders and superannuation funds in 2016.

“That’s a benefit to almost every working Australian and new taxes on banks will erode this benefit,” she said.