Eleven ways banks can level the playing field
Imagine playing a complicated board game where the opponent has written the rulebook and you haven't read it. That would reduce your chance of coming out on top quite significantly, wouldn't it?
That's how the game of retail banking is played.
Your opponent has written the rules, which are its terms and conditions and its service contracts, all of which are designed for its protection, not yours.
It has had a privileged position in developing the Code of Banking Practice, which further defines the rules of the game, and forces the banks to behave reasonably and ethically, without defining what that means, to use its "best endeavours" to do other things like provide safe internet banking, and to only lend to people it believes can pay the money back.
The fifth edition of the code has just come out.
It also contains a number of pledges which are promises to follow the law, such as not misleading customers in advertising, and to tell customers about the details of their products and services.
New Zealanders have come to understand law as being huge, complex and, bemusingly for a citizenry expected to abide by them, often beyond the understanding of all but a coterie of lawyers.
Such pseudo-law is on the increase in New Zealand, as is real law. When I searched to see how many acts of Parliament there were on legislation.govt.nz, I got 2140. Good luck abiding by all of those.
Of course, the Bankers Association hasn't had everything its own way. Pesky lawmakers and journalists push back when obvious injustices or excesses occur, though often the cure ends up looking worse than the disease, so nobody does anything.
But that pushback does mean the banks have responded and there are some genuine protections that go beyond the basics of the law.
Take, for instance, the protections around someone stealing your money through internet banking by hacking your home computer.
But even in such instances, there is a lack of clarity.
It is best to think of the code as pseudo-law and, in the pseudo-court of the Banking Ombudsman, where people can argue for compensation, it is key.
Take the passages covering the kinds of things that can mean you end up footing the bill for money stolen online.
What does "regularly" mean in the context of changing your internet password?
What are the "reasonable" steps you need to take to ensure your computer has up-to-date protective software?
What does the requirement to "act fairly and reasonably" towards customers "in a consistent and ethical way" mean when it is hedged with the following: "What may be fair and reasonable in any case will depend on the circumstances, including our conduct and yours."
Do you feel confident that you know what fair and reasonable mean in the context of the code? I don't.
I have spent the last couple of weeks wrestling with the code, but I'm paid to do so. If more than one in 100,000 New Zealanders reads it without being prompted by a bad experience with a bank, I would be amazed.
I have come to some conclusions about its weaknesses and strengths, and the changes I would make to it to give it more meaning and keep banks honest.
They are these:
Sunday Star Times