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Issue 30 - July 2017

An update from the Code team

The Code team is a separately operated and funded team within the Financial Ombudsman Service (FOS) Australia. Its activities are separate from the external dispute resolution scheme operated by FOS. 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:

  • The Banking Code Compliance Monitoring Committee (CCMC)
  • Customer Owned Banking Code Compliance Committee (COBCCC)
  • General Insurance Code Governance Committee (GICGC)
  • Insurance Brokers Code Compliance Committee (IBCCC)
  • Life Code Compliance Committee (LCCC)

Banking Code Compliance Committee
2017-20 Workplan:
In June 2017, the CCMC published its 2017-20 Workplan. The Committee has specifically designed the Workplan to reflect its response to the recent independent review of its operations and remains committed to delivering a comprehensive and meaningful monitoring program. The Committee’s key priorities this year are:

  • Update the process for the investigation of Code breach allegations to reflect a risk based approach.
  • Develop enhanced data collection processes and systems to inform risk based assessments.
  • Conduct a major Own Motion Inquiry into Internal Dispute Resolution, and follow up Inquiries into Direct Debits and Financial Difficulty.
  • Increase the depth and frequency of publications and guidance notes to report on industry trends and encourage continuous improvement.
  • Engage with all stakeholders to assist with the transition to the new Code as the need arises.

A copy of the CCMC’s workplan has been published on its website. For more information, visit

CCMC: Stakeholder engagement
In response to the Khoury reviews the ABA have been working with stakeholders to develop and deliver a new Banking Code and Mandate by the end of the 2017 calendar year. As a key stakeholder, the CCMC has met with the ABA on a number of occasions to discuss and provide feedback during this development phase. The Committee will continue to engage with the ABA as the Code and Mandate are developed and implemented.

The end of June signals the conclusion of the CCMC reporting period and the issuing of its Annual Compliance Statement (ACS) to subscribing banks. The ACS is the largest annual data collection event for the CCMC. The Committee uses the data collected to monitor the Banks overall compliance with the Banking Code, to locate areas of high risk for future Own Motion Inquiries and provide feedback to subscribing banks on their performance. In line with the Khoury recommendations, the CCMC has been working with subscribing banks to improve the consistency of reporting across the industry to create more meaningful reports and lines of inquiry.

CCMC: Special Report into access to banking services by Indigenous customers
With a renewed focus on promoting best practice and continuous improvement across banks, the CCMC will shortly publish its first special report. The Committee has focused on clause 8 of the Banking Code regarding customers in remote Indigenous communities, a provision that is expected to be expanded under the revised Code. In preparing this report CCMC Staff met with subscribing banks, community advocates and members of Indigenous communities and action groups to better understand the challenges faced by members of remote Indigenous communities and the current efforts by banks to address these challenges. The Committee has found that most banks are meeting or exceeding their Code obligation in this area. The bank majors have specifically developed Reconciliation Action Plans (RAPs) that provide financial literacy programs, programs to address issues of financial inclusion, development of Indigenous financial counselling programs and micro finance / match savings initiatives. Banks are also investing in training with a focus on cultural awareness, managing staff who work directly with Indigenous customers, recruitment and retention, and creating an inclusive workplace.

To find out more about the banks initiatives, the report will be available on the CCMC’s website,

Customer Owned Banks

Compliance with direct debit obligations
In May 2017, the Customer Owned Banking Code Compliance Committee (the COB Committee) conducted an Own Motion Inquiry into Institutions’ compliance with the direct debit obligations in section 20.1 of the Customer Owned Banking Code of Practice (the Code).

Under section 20.1 of the Code, Institutions are required to take and promptly process a request to cancel a direct debit. Institutions cannot direct or suggest that consumers first raise any such request or complaint directly with the merchant or service provider.

The ability for customers to cancel direct debits via their Institution is a powerful safeguard for customers, especially for those who are in financial difficulty. Failure for Institutions to accept or act on notice of a direct debit cancellation request may cause members who are already in financial trouble to be further impacted when fees are imposed on the account.

This inquiry is a follow-up to earlier direct debit inquiries in 2010 and 2012.

The findings of this inquiry will be published on the COB Committee’s website

Future inquiry into compliance with privacy obligations
The next Own Motion Inquiry is to be undertaken by the COB Committee. It will 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’.

Annual Compliance Statement 2017
The 2017 Annual Compliance Statement (ACS) for customer owned banking institutions has been reviewed and will be issued in June via an individual online portal for completion by 31 August 2017.

The ACS is a central component of the COB Committee’s monitoring work and asks for information about Code compliance frameworks and breach and complaints reporting and monitoring, as well as Code Subscribers’ overall culture of compliance and examples of good practice. The reporting period is 1 July 2016 to 30 June 2017.

The 2017 ACS includes the following changes:

  • inclusion of a new category for the size of institutions based on the number of active members
  • review of the categories for Code breach reporting to avoid duplication of sections of the Code, in particular regarding key commitments
  • separate section 4.6 for reporting complaints resolved within five business days.

We held a webinar on 22 June 2017 to assist Code Subscribers in completing the 2017 ACS and to answer any queries. The webinar link is

Insurance Brokers

Annual Compliance Statement 2016
The data for the Insurance Brokers’ Annual Compliance Statement for the period 1 January 2016 to 31 December 2016 has been received and analysed.

The Insurance Brokers Code Compliance Committee (IB Committee) will publish a detailed report regarding its findings in its Annual Review 2016-17.

General Insurance

General Insurance Industry Data Report 2016–17
Each year the General Insurance Code Governance Committee (the GI Committee) is required to prepare a public report containing aggregate industry data and consolidated analysis on compliance with the 2014 General Insurance Code of Practice (the Code).  We have completed the development of the GI Committee’s data request for the 2016–17 reporting period and will be distributing it to general insurers and other participants who subscribe to the Code during the first week of July 2017.

The key objectives of the public report include the following:

  • provide insight into the state of the general insurance (GI) industry, identify risks and operational challenges that may affect its ability to comply with the Code’s standards
  • provide insight into the consumer experience
  • help the GI Committee monitor and enforce compliance with the Code to improve the GI industry’s service standards and identify where improvements to the Code may be made
  • enhance and strengthen self-regulatory frameworks.

Own Motion Inquiry into claims investigations and outsourced services
On 5 April 2017, the GI Committee published its Own Motion Inquiry report, which provides an in-depth look at the claims investigation and outsourcing practices of a selection of general insurers who subscribe to the Code.

The Own Motion Inquiry resulted in 30 recommendations aimed at helping general insurers and other industry participants who subscribe to the Code to improve compliance with Code standards. These recommendations include several in relation to the conduct of investigators within a claims environment, including a recommendation that subscribers to the Code work with the Insurance Council of Australia to develop a set of best practice standards. The ‘Own Motion Inquiry – Investigation of Claims and Outsourced Services’ can be found here and a snapshot can be found here.

Some of the GI Committee’s key findings are that:

  • general insurers rely on claims anomalies – ‘fraud investigation indicators’ – that suggest a claim is ‘high risk’ and apply a triage process to determine whether further enquiries or closer examination of the claim is required, typically done via an external Investigator
  • oversight of Service Suppliers’ conduct by some general insurers may be inadequate, particularly in relation to claims handling
  • there is not enough guidance provided to external Investigators when interviewing consumers including minors
  • some general insurers have authorised Service Suppliers to handle complaints when the Code requires respondents to perform this function
  • some general insurers’ contracts with Services Suppliers do not align with the Code’s requirements.

Submission to the Insurance Council of Australia’s review of the Code
On 17 February 2017, the Insurance Council of Australia (ICA) launched its review of the 2014 General Insurance Code of Practice (the Code).

In late May 2017, the GI Committee provided its submission to the ICA, outlining several areas of the Code that the GI Committee considers could be improved.  One of the GI Committee’s key recommendations is that the ICA adopts all 30 recommendations from the GI Committee’s Own Motion Inquiry into claims investigations and outsourced services.

Life Code Compliance Committee
The Code team has commenced its support role of the new Life Code Compliance Committee (LCCC). Engagement with the Financial Services Council and code subscribers to determine working relationships and expectations have taken place during the June quarter. The Code team is currently working to prepare papers for the LCCC’s inaugural meeting in July.