Accomplish 29 – March 2017

‘We support credit unions, mutual banks and mutual building societies to achieve service standards Australians can trust.’

In this issue:

News from the Committee

Own Motion Inquiry ‘Community Engagement’

Future Own Motion Inquiries

Feedback wanted

Annual Compliance Statement Verification Program

Code of Banking Practice Review

Check out our website

Diary dates

News from the Committee

Order of Australia for Committee Chair, Dr Sue-Anne Wallace AM

The independent Chair of the Committee, Dr Sue-Anne Wallace, was made a Member of the Order of Australia in the 2017 Australia Day Honours list. The Committee congratulates her on this amazing achievement.

Dr Wallace received her award for significant service to the not-for-profit sector, particularly through charitable fundraising reform and establishing codes of practice. From 2004-2009, she was CEO of Fundraising Institute Australia and was appointed as a member (2005-2009) and Chair (2010-2015) of the Australian Council for International Development Code Compliance Committee. She was Executive Officer of the Vincent Fairfax Family Foundation from 2010 to 2012 and has served on two international committees setting and monitoring charitable fundraising principles and standards. Since 2015 she has been Vice-President of the Humanitarian Quality Assurance Initiative (Geneva).

Re-appointment of Committee members

Anita Schut has been re-appointed for a second term in her role as industry representative by the Customer Owned Banking Association (COBA) until 31 December 2019.

Carolyn Bond AO has been re-appointed for a second term in her role as consumer representative by the Consumers Federation of Australia (CFA) until 28 February 2020.

Conference attendance

Sally Davis, General Manager Code Compliance & Monitoring was part of a panel discussion at the inaugural Responsible Lending and Borrowing Summit 2017 in Sydney.

The Committee will attend the Australian Securities & Investment Commission (ASIC) Annual Forum in Sydney later this month to discuss the balance between innovation and stability in our rapidly transforming financial system.

Stakeholder engagement

Following the Christmas/New Year break, the Code Team continued its engagement with the Customer Owned Banking Association (COBA) and its Chair and the Consumer Federation Australia (CFA), in addition to meetings with Financial Ombudsman Service (FOS) Australia executive staff and ombudsmen to discuss emerging issues regarding the customer owned banking industry.

Own Motion Inquiry ‘Community Engagement’

The Committee has recently conducted an inquiry into Key Promise 9 of the Code which reflects the customer owned banking sector’s commitment to serving both its communities and its customers.

This inquiry developed a better understanding of how institutions manage this obligation, identified and promoted good business practices for engaging with communities and assessed the effectiveness of institutions’ impact on the wider community. It also benchmarks current industry practice and makes recommendations for good industry practice based on the data collected.

The inquiry confirmed that the customer owned banking sector is community focused, reflecting its history and the culture and frameworks that underpin its dealings with customers.

Some of the key findings include:

  1. Many institutions reported that they engage with over 100 different community groups on an annual and ongoing basis.
  2. Over 50% of institutions engage with communities on a weekly or monthly basis.
  3. 73% of institutions spent more than $20,000 on community engagement activities including 19% of the largest institutions that spent over $500,000 during the 2014-15 period.
  4. Philanthropic or voluntary community engagement, where the engagement does not provide direct benefit to the institution, is wide-spread.
  5. Community engagement brings benefits to both communities and institutions and increases community trust and cohesion.

A copy of the report can be found here.

Future Own Motion Inquiries

The Committee is currently discussing potential areas of concern for future own motion inquiries. These include a follow up inquiry into direct debit obligations, and an inquiry into privacy obligations.

The proposed own motion inquiry into Direct Debit obligations will be the second follow-up inquiry based on the Committee’s inquiry in 2010 and the subsequent follow up in June 2012. The inquiries assessed the Customer Owned Banking institutions’ compliance with its direct debit obligations under Section 20.1 of the Code.

In March 2011 the Committee recommended in its report that all institutions must ensure that staff are adequately trained and understand the obligations under the Code and the Bulk Electronic Clearing System (BECS) rules.

In June 2012 The Committee provided in its report a sample of a direct debit compliance assessment questionnaire.

Feedback wanted

The Committee is aiming to develop an Industry Liaison Group.

If you are interested in providing ad hoc feedback on the compliance monitoring activities and would like to be involved in the development of compliance questionnaires, such as the Annual Compliance Statement and Own Motion Inquiries, please contact Daniela Kirchlinde on dkirchlinde@codecompliance.org.au The commitment will not be arduous. It will be as simple as providing comments on draft documents, such as the current development of the questionnaire for the Own Motion Inquiry into Direct Debit arrangement.

Annual Compliance Statement Verification Program

The Annual Compliance Statement (ACS) Verification Program was conducted via telephone conferences between November and early December 2016. This year

22 institutions participated in this Program, including all institutions with over $1b assets and five other institutions varying in size.

Prior to each telephone conference, institutions were provided with a copy of their 2015-16 ACS response and for the first time with an ‘Aggregated Outcomes and Comparative Data’ document. The purpose of this newly-developed comparative data document is to provide more targeted feedback to enable the institution to benchmark its compliance outcome against industry performance in general and against other institutions within the same size category.

Key findings included:

  • Inconsistent self-reporting of complaints data is one of the biggest challenges of the ACS activity.
  • Need for improved guidance for completion of the ACS.
  • The level of maturity and sophistication of an institution’s compliance framework often depends on the systems and infrastructure that support that framework.
  • Institutions need to look beyond their complaints data for sources of Code breaches and share examples of other sources to promote a positive compliance culture.

Pending the Committee’s resources and funding, prior to the completion of the 2017 ACS we are planning to conduct a webinar and host a ‘Question and Answer’ session. The purpose of this session will be to address the industry’s need for more effective guidance for completion of the ACS.

Code of Banking Practice Review

The independent Review of the Code of Banking Practice has been published.

A copy of the Review can be found here.

A copy of the report on the review of the Code Compliance Monitoring Committee’s (CCMC) activities can be found here.

The CCMC has welcomed the findings of a review of its compliance monitoring work with the Code of Banking Practice. Thirteen banking groups (covering 95% of the Australian retail banking market) subscribe to the voluntary Code, which sets standards of good practice in the banking industry. The CCMC is the Code’s independent monitoring body.

The review made six recommendations for the CCMC’s future operations. In a parallel review of the Code itself, reviewer Phil Khoury of Cameron Ralph Navigator recommended that the CCMC funding be increased and that changes be made to its role and powers as set out in its Mandate.

The recommendations would see, amongst other things, the CCMC shift its emphasis away from investigating individual complaints in favour of an expanded role monitoring overall sector practice and reporting effectively and transparently on this monitoring work.

Some of the recommendations might be relevant for the potential upcoming review of the Customer Owned Banking Code of Practice.

Check out our website – www.cobccc.org.au

We now have specific information for consumers and Code Subscribers.

Check out how to comply with the Code regarding financial difficulty obligations, advertising standards and direct debit arrangements. Consider providing the fact sheets in the news and publications section to your staff for training purposes.

Consumer information includes explanations of customer rights under the Code, including the rights of customers in financial difficulty, as well as information for small business and instructions on how to report a concern. Meg’s story provides a good case study.

Diary dates

Committee meetings

22 March 2017, Committee meets in Sydney
31 May 2017, Committee meets in Melbourne
Tba September 2017, Committee meeting
29 November 2017, Committee meets in Melbourne

Conference attendance

28 Feb to 1 Mar 2017, Responsible Lending and Borrowing Summit, Sydney
20 March 2017, ASIC Forum, Sydney
21-24 October 2017, COBA Convention, Brisbane

 

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