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Issue 18 - August 2014

An update from the Code team


The FOS Code team supports four independent committees to monitor codes of practice in the Australian financial services industry. The codes help financial services providers achieve service standards that people can trust.

All four codes monitored by the FOS Code team have been revised in the past year, with important consequences for service providers and consumers – and for code governance.

Not surprisingly, code transition has been a primary theme for the team throughout 2013-2014 as it continued to work closely with stakeholders to successfully transition to these new frameworks.


2014 Insurance Brokers Code of Practice
The Insurance Brokers Code of Practice came into operation on 1 January this year, replacing the previous 2007 version.

The Code’s reach is significant given insurance brokers place around half of the total insurance business in Australia every year. A sizeable number of these brokers are members of the National Insurance Brokers Association (NIBA) and as such are obliged to meet the standards of practice set by the Code.

Using a revised, consumer-friendly format, the new Code restates the obligations insurance brokers have to their clients – including the obligations to act in a client’s best interests – and includes new guidance on the meanings of important terms. The Code also provides a mechanism for brokers’ clients to report an alleged breach under the Code.

At the same time, a new governance structure has been developed to underpin the new Code, with the establishment of a new Code Compliance Committee to monitor the compliance of insurance brokers with their Code obligations. The Committee comprises an Independent Chair, a consumer representative and an industry representative. The FOS Code team will provide secretariat, monitoring and administrative services to the Committee.


2014 Customer Owned Banking Code of Practice
The Customer Owned Banking Code of Practice is the industry Code for Australia’s credit unions, mutual banks and mutual building societies.

This Code also came into operation on 1 January 2014 following an independent review of the Code’s predecessor, the 2010 Mutual Banking Code of Practice. All code subscribers should have completed their transition to the revised Code by 1 July 2014.

Over the past few months, the FOS Code team and the Code Compliance Committee (customer owned banking institutions) have worked hard to ensure alignment of the Committee’s code monitoring functions and governance structures with the new framework.

The Committee will operate under a new charter (replacing the former constitution), a copy of which can be provided on request.


2013 Code of Banking Practice
The new Code came into operation on 1 February 2014 and all subscribers to the previous 2004 Code have adopted it.

The new Code includes strengthened financial hardship assistance clauses and new clauses covering services provided to customers in remote Indigenous communities.

We previously wrote about the new Code in The Circular - Issue 16.  

Significant changes to the Code include:

  • New and stronger financial hardship provisions that mean banks will need to be more alert to people who may be experiencing financial difficulty in meeting their repayments. They will need to respond promptly to requests for assistance, and ensure bank staff are well trained in understanding the bank’s financial hardship commitments.
  • A commitment not to combine accounts or assign debt when a bank is actively considering whether a customer is in financial difficulty.
  • A commitment to provide information about no or low fee accounts to customers if the bank becomes aware the customer has a Commonwealth concession card, such as a Seniors Health Card, Health Care Card or Pensioner Concession Card.
  • Clarification that chargeback rights exist for disputed transactions on relevant debit cards, including debits under recurrent payment arrangements.
  • New provisions for customers in remote Indigenous communities, including making relevant information accessible, providing assistance to customers to  meet identification requirements, and appropriately training relevant staff to be culturally aware.
  • A commitment that banks will only sell debts to third parties that agree to comply with the ‘Debt Collection Guideline: for Collectors and Creditors’.
  • A commitment to send an annual reminder about insurance obligations to customers with a mortgage on a primary place of residence or residential investment property.


2014 General Insurance Code of Practice
The 2014 General Insurance Code of Practice was officially launched on 1 July 2014 by the Insurance Council of Australia.

Key features of the 2014 Code include:

  • using plain English to communicate Code obligations to consumers
  • stronger and more detailed obligations on Code subscribers to provide assistance to consumers in financial difficulty
  • clearer guidance and timeframes about the handling of insurance claims and complaints made by consumers

The 2014 Code also establishes a transparent and independent governance framework, which includes the creation of an independent Code Governance Committee responsible for monitoring and enforcing compliance with the Code. The FOS Code team looks forward to providing code administration and secretariat services to the new Committee.

Subscribers have until 1 July 2015 to comply with the new Code.