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Taming the banking tigers



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Tuesday 21 August 2012

TAMING THE BANKING TIGERS

WHEN: 12.30pm today

WHERE: Senate Courtyard, Parliament House, Canberra

The Independent Member for Denison, Andrew Wilkie, this morning gave formal notice of a Private Members’ Bill to establish a new mandatory banking code of conduct and give APRA the power to name and shame and even fine banks.

``The present Code of Banking Practice is a toothless tiger,’’ Mr Wilkie said. ``The banks don’t follow it because it’s voluntary and there are no sanctions for breaches. There are tens of thousands of complaints each year that go un-responded, un-investigated and un-sanctioned.

``The Banking Amendment (Banking Code of Conduct) Bill would make the code mandatory and allow customers to complain to the Australian Prudential Regulation Authority if they feel their bank has breached the code.

``APRA would gain the power to name and shame banks and hand out civil penalties for grievous breaches of the code.’’

Mr Wilkie introduced the Banking Amendment (Banking Code of Conduct) Bill in response to calls from the Tasmanian Small Business Council.

``Small businesses feel like they are banging their heads against a brick wall when they try to get their complaints addressed,’’ Mr Wilkie said.

``The current code of practice is supposed to provide a customer service guarantee but the reality is quite the opposite.

``Customers get strung along and complaints never get heard or investigated, let alone addressed.’’

WHAT WILL THE BILL DO?

The Banking Amendment (Banking Code of Conduct) Bill legislates that the relevant Minister will create the Banking Code of Conduct (as a legislative instrument) in consultation with representatives of the banking industry and banking consumer advocates.

The new code of conduct covers important issues such as banks’ responsibilities in regards to privacy, complaint handling, debt collection and changes to terms and conditions and fees and charges.

The code of conduct would be updated from time to time and be based on the existing Code of Banking Practice as published by the Australian Bankers Association.

The Bill allows banking customers to complain to APRA if they feel their bank has breached the code of conduct.

APRA may investigate these complaints, and must investigate them if presented with evidence that shows that a breach may have occurred and the customer has made every effort to resolve the matter with the bank directly.

When APRA investigates a potential breach of the code it must provide a report of its investigations to the bank for response. APRA then give the response and the investigation report to the customer who made the original complaint.

APRA may then also name and shame the bank and must name and shame banks which continue to breach the code. APRA can choose to levy a civil penalty for particularly grievous breaches of the code.

FURTHER INFORMATION: Philippa Duncan 0428 528 673