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Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017

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2017

 

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

 

Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017

 

 

 

EXPLANATORY MEMORANDUM

and

STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

 

 

 

 

 

 

Circulated by authority of

Andrew Wilkie MP

Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017

 

 

OUTLINE

 

This bill seeks to enshrine a Banking Code of Conduct in legislation. It requires the Minister to create a Banking Code of Conduct as a legislative instrument, which must reflect the Code of Banking Practice published by the Australian Bankers’ Association. The bill empowers the Australian Prudential Regulation Authority (APRA) to receive and assess complaints by customers of authorised deposit-taking institutions (ADIs, for example banks, building societies and credit unions). It also allows APRA to impose civil penalties on ADIs that have breached the Code, and requires them to “name and shame” the ADIs involved by publishing their details on their website and in newspapers. The bill requires the Minister to review the Code every 3 years and, in doing so, consult with customers of ADIs, including individuals and small businesses.

 

FINANCIAL IMPACT

 

The bill will have no financial impact.

 

NOTES ON CLAUSES

 

Clause 1: Short Title

 

1.       This clause is a formal provision and specifies the short title of the Bill as the Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017 .

 

Clause 2: Commencement

 

2.       This clause provides for the commencement of the Act on the day it receives Royal Assent.

 

Clause 3: Schedules

 

3.       This clause establishes that, as the intent of the Bill is to be realised through amendments to another Act, the Schedules of this Bill will amend that Act accordingly.

 

Schedule 1

 

Banking Act 1959

 

Item 1: Subsection 5(1)

 

1.       Item 1 inserts a definition of “Banking Code of Conduct” into the principal Act, which will be inserted by item 3.

 

Item 2: Subsection 5(1) (definition of civil penalty provision )

 

2.       Item 2 inserts a new definition of “civil penalty provision” into the Act which allows the Banking Code of Conduct to include civil penalty provisions.

Item 3: At the end of Part II

 

3.       Item 3 inserts a Division 6 into the Act that establishes a Banking Code of Conduct.

4.       Section 36A requires the Minister to make, by legislative instrument, a Banking Code of Conduct, which sets out standards that ADIs must comply with when dealing with their customers.

5.       Section 36B allows customers of ADIs to complain to APRA if they believe that the ADI has failed to comply with the Code. It requires APRA to  accept the complaint if they are satisfied that the ADI could have failed to comply with the code, that the customer has taken all reasonable steps to bring the failure to the attention of the ADI, and if the matter might not have been properly resolved.

6.       Section 36C requires APRA, once they have accepted a complaint, to investigate it and notify the ADI in writing of the complaint and the findings of the investigation. It also allows the ADI to provide APRA with a written response to the complaint and requires APRA to give the customer a copy of the notice and the ADI’s response.

7.       Section 36D requires APRA, if they have found that an ADI have breached the Code, to publish the details of the decision, except if the ADI is requesting that APRA reconsider the decision.

8.       Section 36E requires APRA, in publishing the decision, to post the name of the ADI on their website and in newspapers.

9.       Section 36F specifies that the Minister must not amend the Code without consulting with individual customers of ADIs, small business customers of ADIs, and ADIs themselves.

10.   Section 36G requires the Minister to review the Code at least every 3 years and table the review in Parliament within 15 sitting days of its completion.

 

Item 4: First making of the Code

 

11.   Item 4 requires the Minister to make the Code within three months after the commencement of the Act.

12.   Item 4 specifies that the Code, as first made, must include standards equivalent to those in the Australian Bankers’ Association Code of Banking Practice, as in force on 27 March 2017. A standard may not be included, however, if the Minister is satisfied that it would be impossible or impractical to enforce or assess. This decision must be taken in consultation with ADIs, and persons or bodies that the Minister is satisfied represent the majority of individual and small business customers of ADIs.



STATEMENT OF COMPATIBILITY WITH HUMAN RIGHTS

 

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017

 

This bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the bill

 

This bill seeks to enshrine a Banking Code of Conduct in legislation. It requires the Minister to create a Banking Code of Conduct as a legislative instrument, which must reflect the Code of Banking Practice published by the Australian Bankers’ Association. The bill empowers the Australian Prudential Regulation Authority (APRA) to receive and assess complaints by customers of authorised deposit-taking institutions (ADIs, for example banks, building societies and credit unions). It also allows APRA to impose civil penalties on ADIs that have breached the Code, and requires them to “name and shame” the ADIs involved by publishing their details on their website and in newspapers. The bill requires the Minister to review the Code every 3 years and, in doing so, consult with customers of ADIs, including individuals and small businesses.

 

Human rights implications

 

This bill does not engage any of the applicable rights or freedoms. 

 

Conclusion

 

This bill is compatible with human rights because it does not raise any human rights issues.

 

 

 

 

Andrew Wilkie MP