Complaints about Banks – the Government’s bank inquiry recommends that a Banking and Financial Sector Tribunal be set up by July 1, 2017. See the latest from the Sydney Morning Herald:
Banks, consumer groups critical of bank inquiry recommendations By: Georgia Wilkins
It was supposed to be Prime Minister Malcolm Turnbull’s best shot at hosing down calls for a royal commission, but a parliamentary inquiry into the banks has run into trouble almost immediately with the sector and consumer groups alike panning its first report.
Banks say a plan to name and shame employees who break the rules within five days after their breach is “unrealistic” and have hosed down support for a banking tribunal.
Financial rights advocates have also criticised plans for a tribunal, saying it would be “catastrophic” for consumers.
The recommendations are part of a report by the government-dominated parliamentary inquiry into the big four banks.
The inquiry was set up by Mr Turnbull in response to a series of scandals and misconduct at the banks and has triggered calls for a royal commission.
Lobby group the Australian Bankers’ Association, which represents 25 banks, said that, while it supported the desire for greater transparency in the banking sector, reporting breaches within five days was impractical.
“I understand the desire for senior executive accountability, but the idea that you would know that a breach had occurred, who is responsible and what action to take all within five business days does seem pretty unrealistic,” ABA chief executive Steven Munchenberg said.
The lobby group has also softened its support for a tribunal, flagged by the government in October. Mr Munchenberg said that, while the idea had merit, it was unlikely to be an appropriate way to handle “a vast majority of complaints”.
Labor and the Greens dismissed the report on Thursday, describing the inquiry as a “stage-managed circus” designed to avoid a royal commission.
Labor said the idea of a tribunal was “half formed” and had evolved from private discussions between the Prime Minister, Treasurer and bank CEOs.
Other recommendations in the report include forcing banks to alert customers if their financial planners are in breach of the law – something they are not currently required to do – and forcing banks to provide open access to their data to improve competition in the sector by 2018.
So far, most large banks have not shared their customer credit data, and critics say this is partly because they see holding on to the data as a competitive advantage and prevents people from “switching”.
Under the recommendations, a Banking and Financial Sector Tribunal would be set up by July 1, 2017 and would replace the Financial Ombudsman Service, the Credit and Investments Ombudsman and the Superannuation Complaints Tribunal.
A coalition of consumer groups and financial counsellors have already flagged concerns about a tribunal in a submission to a review in October, saying it would backfire on customers.
Kat Lane, acting co-ordinator for the Financial Rights Legal Centre, said the report failed to listen to these concerns.
“If they put in a tribunal, it would be catastrophic. You have to have access to justice as a consumer. You have to be able to resolve your problem in a quick, easy way,” she said.
Gerard Brody, chief executive of the Consumer Action Law Centre, also rejected the tribunal model, saying a one-stop external dispute resolution system was better equipped to resolve consumer complaints.
“Tribunals are inevitably more legalistic and less accessible to consumers,” he said. He welcomed efforts to bring more transparency to breach reporting.
A Westpac spokesman said: “While we may not agree with all aspects of the report, the committee can play a constructive role in building on industry reforms that are currently being implemented.”
A spokeswoman for National Australia Bank said it would consider the recommendations and the government’s response. The Commonwealth Bank declined to comment.
The Customer Owned Banking Association, which represents smaller lenders, welcomed efforts to tackle competition.
“Clearly, we need to unleash competition in the banking market and the top priority should be action to reduce the major banks’ unfair funding cost advantages,” the association’s CEO Mark Degotardi said.
Speaking at a seminar on banking and culture in Melbourne on Tuesday, corporate regulator chief Greg Medcraft said the failure of banks and other companies to recognise systemic problems within their organisation was one of the biggest issues facing the regulator.
“I still find that some very large organisations still think it’s a case of a few bad apples,” he said.
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