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Issue 32 - February 2018

An update from the Code Compliance and Monitoring Team

The Code team is a separately operated and funded business unit of the Financial Ombudsman Service (FOS) Australia. We support independent committees to monitor compliance with codes of practice in the Australian financial services industry to achieve service standards people can trust. Find out more about who we are and what we do.

The five committees we currently support are:

  1. Banking Code Compliance Monitoring Committee
  2. Customer Owned Banking Code Compliance Committee
  3. General Insurance Code Governance Committee
  4. Insurance Brokers Code Compliance Committee
  5. Life Code Compliance Committee


1. Banking Code Compliance Monitoring Committee (CCMC)

Annual Report: Banking Practice in Australia 2016-17
The Banking Code Compliance Committee’s Annual Report, Banking Practice in Australia 2016-17, was published on Thursday 7 December 2017 and provides an in-depth look at banks’ compliance with the Code of Banking Practice and an overview of the Committee’s monitoring program for the 2016-17 reporting period. One highlight includes a 30% increase in breaches of the Code.

Inquiry into banks’ compliance with Direct Debit obligations 
In October 2017, the Banking Code Compliance Monitoring Committee released its report into banks’ compliance with their direct debit obligations under clause 21 of the Code.

Research conducted by the CCMC in early 2017 identified that:

  • When approached by mystery shoppers, banks provided non-compliant advice on 54% of interactions.
  • Branches were more likely to provide non-compliant information than their call centre counterparts; and
  • Banks had little to no information available to customers that outlined their rights to cancel direct debits.

Christopher Doogan AM, Independent Chairperson of the Banking Code Compliance Monitoring Committee, has noted that the ability for people to cancel a direct debit via their bank is an important right that gives them control of their finances.

The CCMC made seven recommendations and called on the Australian Bankers Association (ABA) and banks to address this issue.  The Committee will continue monitoring banks’ compliance in this area until it is satisfied that compliance has permanently improved. Where the CCMC identifies ongoing non-compliance and a bank has not taken steps to implement the recommendations made, the CCMC will consider further action.

For more information, please read the Direct Debit Report.

Current Own Motion Inquiry
The CCMC is currently examining banks’ monitoring activity to further analyse the breaches reported by banks during the 2016/17 Annual Compliance Statement Program.

Breach CCMC anticipates reporting on:

  • the level of monitoring that banks’ are conducting
  • the issues that are leading to banks’ non-compliance
  • the number of customers impacted by banks’ failure to comply with Code obligations
  • the financial impact to customers caused by banks’ failure to comply with Code obligations.

The CCMC will be working with banks to collect data in early 2018 and will look to report findings in June 2018.

Code of Banking Practice development 
In response to the Khoury reviews the ABA has been working with stakeholders to develop and deliver a new Banking Code and Charter in early 2018. As a key stakeholder, the CCMC met with the ABA to discuss and provide feedback during this development phase.


2. Customer Owned Banking Code Compliance Committee (COBCCC)

Annual Compliance Report 2016-17
The COBCCC Annual Compliance Report was published on Friday 1 December 2017 and provides an in-depth look at its work in monitoring compliance with the Customer Owned Banking Code of Practice for the 2016–17 financial year. One of the key findings is that self-reported breaches increased by 50%, but this is not consistent across all COBAs.

Committee Chairman, Dr Sue-Anne Wallace AM, said that the Committee hoped the report’s findings would ‘be a valuable source of insight and learning for customer owned banking institutions, prompting renewed efforts to improve customer service’.

Download a copy of the report to find out more.

Annual Compliance Statement Verification Program
During October and November 2017, telephone conferences were undertaken with a selection of 24 Code subscribers including provision of benchmark documents. The selection included all institutions with over $1b in assets and other institutions based on the reporting of significant breaches and high volume of privacy breaches and/or complaints.

The findings will be published in March 2018.

Own motion inquiry into compliance with privacy obligations
Data is currently being collated regarding an own motion inquiry undertaken by the Committee to assess institutions’ compliance with privacy obligations under Section D23 ‘Information privacy and security’ of the Code, including Key Promise 8 of the Code ‘We will comply with our legal and industry obligations’.

The inquiry was undertaken in two parts - a series of telephone conferences to selected institutions as part of the Annual Compliance Statement (ACS) Verification Program and an online questionnaire to all institutions.

The findings of both will be published in April 2018.


3. General Insurance Code Governance Committee (GICGC)

The Insurance Council of Australia’s review of the General Insurance Code of Practice
In November 2017, the Insurance Council of Australia (ICA) released its Interim Report on the review of the General Insurance Code of Practice (the Code) and published stakeholders’ submissions. The Committee’s initial submission is now available to download from

After considering the ICA’s Interim Report the Committee provided a further submission to the ICA in December 2017. 

Integration of Committee’s Annual Report and General Insurance Industry Data Report 2016–17 into a single Report Following a review of the Committee’s publication strategy, the Committee will be publishing its first integrated report which will cover the year ending 30 June 2017.

The integration of the two reports is important for several reasons including the following:

  • While both reports relate to the same reporting period, there is a delay of up to six months before publication of the industry data report due to the time needed to collect and analyse the industry data.
  • One of the Committee’s primary functions is to provide advice to the ICA and industry about emerging areas of risk, recommendations to improve industry compliance with the Code and the operation of the Code across the key standards. Integration of the reports will enable the Committee to achieve this outcome without providing a split picture of the industry’s performance.

Own Motion Inquiry into the sale of add-on insurance products
The Committee has commenced an inquiry which will examine various types of add-on general insurance products offered for sale by Code Subscribers. It includes those sold directly, or through intermediaries, in the context of the Code standards that apply when consumers enquire about, buy or renew such products and that underpin the related sales processes and services. The Committee has also invited consumer advocates, such as community and legal aid advocates, to share their insights into the experiences of consumers.


4. Insurance Brokers Code Compliance Committee (IBCCC)

IBCCC: Own Motion Inquiry ‘Competency and Professionalism’
Data is being collated for the own motion inquiry currently undertaken by the Committee to examine Code Subscribers’ understanding of ‘competency’ and ‘professionalism’ and how competency standards are achieved within their organisation.

The findings of the inquiry will be published in April 2018.

IBCCC: Annual Compliance Statement (ACS) 2017
The ACS program is a central component of the Committee’s work to assess Code subscribers’ compliance with the Insurance Brokers Code of Practice. It has been issued to all Code subscribers at the end of December 2017 for completion by March 2018.

The ACS asks for information about Code compliance frameworks and breach and complaints reporting and monitoring, as well as organisations’ overall culture of compliance and examples of good practice. In addition, this year it will also include a section to assess how organisations have implemented the recommendations issued by the Committee following its own motion inquiry into internal dispute resolution processes which was published in February 2017.

For the first time, a webinar will be held in February 2018 to assist Code subscribers to complete the Annual Compliance Statement.


5. Life Code Compliance Committee (LCCC)
A new LCCC chair, Anne Brown, former Chief Risk Officer for the Australian Securities Exchange (ASX), was appointed on Monday 29 January, following the resignation of Professor Weisbrot in November 2017. The FOS Code team is undertaking the work of the Committee in preparation for when it convenes.

This work includes:

  • drafting the first Annual Compliance Programme (ACP)
  • investigating reported non-compliance by Code subscribers
  • investigating alleged Code breaches
  • scoping a website for the LCCC
  • engaging with Code subscribers and consumer representative groups.

Activities of the LCCC

During the October to December 2017 quarter, the LCCC:

  • Published a Guidance Note, ‘Self-reporting non-compliance with the Life Insurance Code of Practice’
  • Conducted a desktop audit of subscriber websites to look at what information the subscriber provided about the Code on its website
  • Continued work with subscribers who have reported non-compliance to understand the matters and remedial plans
  • With the assistance of the Code team, engaged with all Code subscribers regarding the Code and role of the LCCC and the Code team
  • Met with ASIC and APRA to understand in depth the work they have conducted so far in gathering claims data from the life insurance industry to inform the LCCC’s data collection project
  • Agreed on the high level data and compliance information to be collected from subscribers for the 1 July 17 - 30 June 2018 financial year, a part of the Annual Compliance Programme (ACP)
  • Together with the Code team engaged with Code subscribers through the FSC Code Working Group regarding the high level information that will be requested as part of the ACP, to obtain feedback to inform the future draft.