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Home > Our
Publications > Australian
Outlook> 2001
> December
Tougher code for
banks AUSTRALIA'S banks and consumer
groups have got behind a radical revamp of the industry's
code of banking conduct.
Under the new measures banks will be legally obliged to
treat their customers fairly, with disputes settled by
the Banking Ombudsman.
Compliance will be monitored by a community consultative
committee, with transgressor banks "named and
shamed" in an annual report.
The code will also clear up problem areas such as the
procedures for cancelling a direct debit or credit
arrangement.
The reforms stem from a 16-month review of the
five-year-old code, carried out by independent reviewer
Richard Viney.
The revised code introduces the contractual obligation
for banks to "act fairly and reasonably towards
(customers) in a consistent and ethical manner".
Under the changes, a bank must "accept
forthwith" a customers's instruction to cancel a
direct debit request, without referring the customer to
the supplier.
On guarantees, banks must have a specific obligation to
"encourage " prospective guarantors to seek
independent advice.
Another problem area, debt collection, is also addressed.
The banks must comply with the Australian Competition and
Consumer Commission's debt-collection guidelines, even if
the problem loans are being handled by a third-party
agent.
Banks must exercise "the care and skill of a
diligent and prudent banker" when assessing credit
requests.
They must also help customers make better-informed
decisions about bank products and services and provide
information about rights and obligations in plain
language.
For instance, banks will be committed to working through
problems with customers in financial difficulties, rather
than using foreclosures as the first resort.
Consumer Credit Legal Centre of Victoria manager Carolyn
Bond said she was pleased the Australian Bankers'
Association supported most of Mr Viney's proposals.
"However, there are still a number of important
recommendations in relation to which the ABA's position
is unclear," she said.
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