Franks to conduct review of banking code
A review of the code of practice for banks could lead to a greater commitment from them to responsible lending and helping customers who strike financial difficulty.
The Bankers' Association has appointed former ACT party MP Stephen Franks to conduct a three-yearly review of the voluntary code.
Mr Franks is a lawyer specialising in company and securities law. He stood for the National party in the last election.
The Banking Ombudsman's office received 1924 complaints in the year to June, and banks paid out $14.5 million in compensation to aggrieved customers in the busiest year of the scheme's 18-year history.
Most of the complaints were associated with the effects of the economic recession and global financial crisis, including with the failure of two ING funds marketed by ANZ, and early repayment charges for fixed term mortgages.
Among the issues Mr Franks has been asked to consider is potential to put more onus on banks to lend appropriately and ensure they deal ethically with customers who default on loans.
In Australia, banks have agreed to include a responsible lending clause to their code and undertaken to be more proactive in helping customers who strike financial difficulty.
The review will also at look at options to make it easier for banks to reverse unilaterally payment mistakes made by customers using internet banking services.
It will also take into account legal and regulatory changes introduced in the last three years, any compliance issues with the code and its "plain English" readability.
Significant law changes affecting the banking sector include proposed anti-money laundering legislation and new rules governing financial advisers.
The code may also need to include non-bank financial institutions that join the Banking Ombudsman scheme in new rules governing financial advisers.
Submissions on the discussion document are due by December 17 and the review is expected to be completed by July next year.