The independent committee that monitors the Customer Owned Banking Code of Practice (the Code) has released its annual report for a year marked by natural disasters and the COVID-19 pandemic, along with extensive regulatory changes stemming from the Financial Services Royal Commission.

Customer owned banking institutions serve about 18% of Australia’s population and manage $138 billion in assets. Sixty customer-owned banking institutions subscribe to the Code.

The report describes the activities of the Customer Owned Banking Code Compliance Committee (the Committee) in 2019-20 which, despite the limitations imposed by the pandemic, included: investigations and inquiries; publication of findings; engagement with subscribers, consumer advocates and regulators; the collection of breach and complaint data in the Annual Compliance Statement (ACS); providing individualised Benchmark Reports to all subscribers; and, offering observations and guidance about industry trends. The report can be accessed here

In the report, Committee chair Jocelyn Furlan acknowledged the exceptionally challenging times for customers and businesses alike but welcomed reports of proactive engagement from Code subscribers with customers in the first months of the pandemic. “It will be important to recognise that the economic and social consequences are likely to continue for some time, with some customers continuing to need support.”

She noted that during 2019-20 the Committee “continued to be mindful of its role to ensure it meets the standards required by the Australian Securities and Investment Commission for robust monitoring of an industry code”.

Analysis of data self-reported by subscribers in the ACS is a vital part of the Committee’s work and is usually outlined in the Annual Report. A COVID-driven extension granted to subscribers this year means that the Committee will continue its verification program into early next year and publish full ACS findings and recommendations in a separate report. The Annual Report includes raw data from the ACS, providing a snapshot of compliance and monitoring activities as well as comparisons with previous years.

The Committee welcomed a 24% increase in the number of breaches self-reported by Code subscribers in the 2019–20 ACS, suggesting subscribers have improved their breach identification and reporting processes. However, 16 subscribers reported nil breaches, which could indicate less-than-robust reporting frameworks. Customer owned banks reported that about 821,000 customers were directly affected by Code breaches, with a financial impact remediated by Code subscribers totalling more than $470,000.

Complaint numbers were similar to the previous year, with deposit-taking products and service continuing to be a major concern for customers.

Code review restarts

The Committee welcomed the recent move by the Customer Owned Banking Association to restart its review of the Code, a process begun two years ago. Since then, the regulatory and legislative landscape has changed significantly, especially in response to the Royal Commission’s recommendations. The Committee is pleased that its industry representative, Cindy Hansen, will be part of the Code Review Advisory Committee.

The Code review presents an opportunity to articulate Code promises related to issues specific to customer owned banking.  The Committee hopes the new Code will reflect what it means to be a customer owned banking institution in terms of meeting customer expectations and needs.  Defining the values of customer owned banking institution is the first step to determining the obligations to which Code subscribers will adhere.

Helping banks meet new expectations

The expected passage of legislation regarding enforceability of Code provisions and the release of a new, enforceable, Australian Securities & Investments Commission regulation governing Internal Dispute Resolution means compliance with Codes and meeting community expectations will become even more critical for customer owned banking institutions. The Committee looks forward to helping subscribers to achieve compliance and meet new service goals in the future.