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Electronic funds transfer systems code of conduct



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COlv44v ONWEALTH

PARLIAMEN TARY .IBR^ARY MICAH

TREASURER

]EMBARGO IMMEDIATE RELEASE - 11 MAY 1989

PRESS

LRELEASEJNO. .a

JOINT STATEMENT BY THE TREASURER, THE HON PAUL KEATING MP, AND ,THE MINISTER FOR CONSUMER AFFAIRS, THE HON NICK BOLKUS, MP

ELECTRONIC FUNDS TRANSFER SYSTEMS CODE OF CONDUCT

The Federal Government expects that a number of shortcomings in the operation of certain electronic banking services identified in a new report will be quickly addressed by the

financial industry.

These problems are identified in the third report of a Working Group of Commonwealth and State officials which has been assessing the implementation of the self—regulatory Code of Practice agreed to in September 1986. The report states that.

there has been progress by financial institutions in ensuring that consumers are covered by the Code.

This Working Group, established by the Commonwealth and. State/Territory Governments, has been examining the adequacy of the self—regulatory arrangements.

During the past two years the Working Group has checked the terms of the EFT contracts institutions offer their customers to ensure their conformity with the Code and advised

institutions where improvements to their contracts are necessary.

This examination has identified three major shortcomings in the implementation of the Code by financial institutions;

some smaller institutions have not moved quickly to prepare and issue new electronic banking contracts;

compliance with the Code's information disclosure requirements varies across institutions; and

there is some doubt about the extent to which knowledge of the Code's requirements has filtered through institutions to the branch level.

The Federal Government expects that those institutions which have not yet issued new electronic banking contracts conforming with the Code will now act swiftly to do so.

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We also expect institutions to have relevant EFT documentation

readily auailable for the information of customers, and that training of branch staff to understand the Code will be improved.

These simple moves would benefit customers and meet 'the obligations the Code places on institutions.

To this end, the Treasury and the Trade Practices Commission will take up these outstanding issues with the industry and report to the Federal Government on the outcomes.

All institutions will be required to finalise outstanding electronic banking contracts, which must conform with the Code, and submit them tb the Treasury and the TPC for review by June 30, 1989. .

in respect of the information for customers on EFT and training of staff, institutions will have to report to both the Treasury and the TPC on what arrangements have been made to address these matters by June 30, 1989.

The Government proposes that the financial institutions' associations will be responsible for ensuring that their members meet three key requirements of the Code of Practice:

adequate disclosure of all relevant information on electronic banking to customers;

establish adequate procedures to investigate disputed electronic transactions and record in a central location data on the nature, frequency and settlement of disputes; and

ensure the privacy of their customers' electronic transactions and accounts.-To these ends, industry associations will be requested to report to the Treasury and the TPC on what effective monitoring procedures have been developed by June 30, 1989.

The Governmeint endorses the recommendation of the Working Group that institutions report, through the industry associations, to the Government and the public. Such reports would make the institutions' compliance with the Code.•. accountable, including dispute and complaint handling relating to EFT.

Guidelines for the preparation of reports on the compliance with the Code by institutions will becirculated to industry associations. The first of these reports, which will be filed annually, will be required by June 30, 1990.

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The Working Group has not been able to resolve the Vexed

question of where the onus of proof should lie in EFT disputes, although this new report does acknowledge it•is a very difficult issue.

while evidence from consumer affairs agencies indicates that customers are experiencing problems, there--is not enough information about how institutions abide by the Code in handling disputes, or about the function of Small Claims Tribunals in resolving disputes.

The Government has asked the Treasury and the TPC to examine this issue further and report any firm proposals in time for consideration at the meeting of the Standing Committee of

Consumer Affairs Ministers in July this year. The Treasury and the TPC will consult with the State consumer affairs agencies, relevant financial institutions and interested parties.

Copies of the Report of the Working Group are available on request from the Treasury or any other member of the Group.

Canberra ACT 11 May 1989

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