Tuesday, February 14, 2012

Chapter 9 - ARE YOU ALL IN OR ALL OUT ?

I found the Martin Committee’s Report impressive and was not intended to sit on a shelf as a ‘forgotten dream’. It required widespread support and a complete change in direction by legislators, regulators, customers and banks.

The Committee was drawn to the idea of the Code of Banking Practice being enforced as a contract. The Code would have fair terms for customers and would set out terms in the banking relationship not dealt with by the substantially unequal parties.

Martin noted the banks went about disclosing information ‘when it suits and denying access when it does not’. The Code would therefore be a contractually enforceable document monitored by the Trade Practices Commission.

To ensure fairness, there needed to be an industry-based dispute resolution scheme. It was noted by the FOS that most complainants came directly to them, demonstrating the ineffectiveness of the banks internal dispute resolution procedures.

The Committee reported disputes arise because customers are unaware of their rights and the FOS recommended improving bank/ customer communication. There was a need for contracts to be written in plain language to avoid disputes.

For the Code of Banking Practice to be effective, it required independent regulation with appropriate penalties. Talk’s cheap. (bla-bla-bla). My research found the Martin Committee played well at first, but Banks won: 1-6; 7-6; 6-2 and 6-0.

The 1996 Code was drafted by the Australian Bankers’ Association. There was no indication the banks would comply with a pre-condition of the Attorney General’s Department that the Code be ‘very vigorously administered.’ FIND MORE...

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