The 1996 Code of Banking Practice sought to create greater commercial certainty and better business practices by fostering good relations between banks and customers. It was intended to set standards of bank conduct, rather than encouraging a litigious culture and creating the need for more legislation.

It was intended to be a legally binding contract between banks and customers and would set standards of good practice by the banks. It would protect individual and small business customers of signatory banks by setting out banking standards and contractual obligations.

The dependence on the Code by customers belies a fundamental flaw in its design and implementation. It was the Code’s initial incongruity with the Martin Committee’s recommendations, and the ineffectiveness as a regulatory regime, which kept it and the later 2003 Code unsuitable for the protection of banking clients.

Institutional Integrity

The integrity of 1996 Code was based on the following principles:

(i) Having regard to the paramount requirement of banks to act in accordance with prudential standards necessary to preserve the stability and integrity of the Australian banking system; and

(ii) To preserve certainty of contract between a bank and its customer, consistent with current law; and

(iii) To allow flexibility in banks’ products and services, and in competitive pricing.

The 1996 Code was therefore intended to:

describe standards of good banking practice and service;

promote disclosure of information relevant and useful to customers;

require banks to have procedures for resolution of disputes between banks and customers; and, if this is achieved,

promote informed and effective relationships between banks and customers;

Having set principles and objectives, the 1996 Code was divided into three parts:

Part A: Disclosures. This part describes information a bank will provide to a customer in respect of the banking services banks offer.

Part B: Principles of Conduct. This part describes principles of conduct banks will follow in dealing with their customers.

Part C: Resolution of Disputes. This part required the banks to have dispute handling procedures.

When banks adopt the Code, they would bind themselves to obligations imposed in their contractual relationship with customers. This clause remains today.

The Code imposed terms and conditions in regard to disclosure:

Clause 2.1: A bank shall provide to a customer in writing any Terms and Conditions applying to an ongoing banking service provided by banks to customers. The terms and conditions shall be:

(i) distinguishable from marketing or promotional material;

(ii) in English and any other language the bank considers appropriate;

(iii) consistent with this Code; and

(iv) clearly expressed;

Foundations for the Code (2003)

The 1996 Code of Banking Practice was an 11-page document, not reflecting the Martin Committee’s sophisticated 572-page report. Not only did the substance of the Code fall short of the Martin Committee’s recommendations, the process of drafting and adoption deviated from what the Committee believed to be fitting.

The Martin Committee members deemed it highly inappropriate for banks to have ‘exclusive responsibility for setting standards of [good] banking practice.’ While a government task force drafted the first Code in consultation with banks, consumer groups and government agencies, the final draft was ‘one whose carriage had been undertaken by ABA itself.’

The repercussions of this failure advantaged the banks rather than protecting their customers, as was intended.

Complaints and Dispute Resolution

Mindful of variations of relevant standards among banks, the Martin Committee recommended observance of minimum standards for internal dispute-resolution procedures, such as:

keeping records of the dispute; and

a clear point of entry into the use of the mechanism; and

clear steps that are readily accessible; and

defined lines of responsibility; and

speedy and timeliness; and

giving of reasons for the decision, and

relevant documentation provided throughout.

The Committee also recommended an increase in monetary threshold of the FOS scheme. While this FOS provided a free dispute resolution service, it operated on the basis of ‘fairness and good banking practice in all the circumstances’ rather than exclusively legal criteria. However, the FOS had limited its jurisdiction and would only hear complaints and disputes by imposing a low financial benchmark. This severely restricted its capacity to resolve many differences.

The attention provided by banks to customer complaints and dispute resolution in the Code was, however far less than the Martin Committee recommended. It reflected neither an intention to rationalise an industry-based resolution scheme, nor an intention to establish comprehensive procedures of dispute resolution. The banks stipulated an internal process for resolving disputes, with external ‘impartial’ processes for resolving them.

The 1996 Code contained no standards for Internal Dispute Resolution other than information on procedures. There was a promise to respond promptly, information on the IDR, reasons for the outcome of the internal process and possible further action that could be taken by customer if banks failed to resolve the issue. The Code stated:

Clause 20.2: A bank shall have available in its branches, descriptive information on:

(i) procedures for handling such a dispute; and

(ii) time within which a dispute will normally be dealt with by the bank; and

(iii) the fact that the dispute will be dealt with by an officer of the bank with appropriate powers to resolve the dispute.

Clause 20.3: Where a request for resolution of the dispute is made in writing or a customer requests a response from the bank in writing, the bank shall promptly inform the customer in writing of the outcome and, if the dispute is not resolved in a manner acceptable to the customer, it would provide:

(i) the reasons for the outcome; and

(ii) further action the customer can take, such as the process for resolution of disputes referred to in section 20.4 of the Code.

Clause 20.4: A bank shall have available for customers, free of charge, an external and ‘impartial’ process (not being arbitration), having jurisdiction similar to that which applies to the Australian Banking Industry Ombudsman Scheme (the FOS), for the resolution of a dispute that comes within that jurisdiction and is not resolved in a manner acceptable to the customer by internal process referred to in section 20.1 of the Code.

Clause 20.5: The external and impartial process shall apply the law, and may take into account what is fair to both the customer and bank.

There were customers who did not desire this arrangement: Those unable to expend resources litigating complaints or disputes were restricted to appealing to the goodwill or good-practice of the banks, against which they had reason to complain. This was because the Code required customers initially to resolve a dispute using the banks own Internal Dispute Resolution process.

Through this process, the banks could choose which complaints to resolve and which not to resolve. This meant that if banks failed to apply the published Internal Dispute Resolution practices provided for under the Code, complainants were severely restricted.

The responsibility of monitoring compliance with the Code was given to the Australian Payments System Council.

Public Disclosure

Although the Code embodied principles of disclosure by banks on their terms and conditions, it did not recognise any right to information beyond that. With a view to protecting public access and awareness of banks conduct towards customers, the Martin Committee recommended ongoing dialogue between the Reserve Bank, Trade Practices Commission and consumer representatives.

However, the Code was silent on ongoing dialogue the parties should continue to carry out. Consumer representatives argued banks, as public institutions, were bound by a social contract through their licenses to operate services ‘on fair and equitable terms’. The banks and consumer representatives held divergent views, with the final authoritative party being the bank CEOs through the ABA.

The ABA regarded variations as culminating in a ‘return to regulation’ and asserted social justice aims be satisfied through government subsidies. They argued the government should provide support for vulnerable members of society, rather than through a return to banking regulation.

Weak Regulatory Model

The 1996 Code departed significantly from the Martin Committee recommendations. In carrying out research for this paper, recommendations the Committee sought that should have found their way into Code (1996) but did not, were:

development of a Code as a result of consultation; and

consideration for banks small business customers; and

monitoring by an appropriate Commonwealth authority; and

disclosure and customers rights to obtain information; and

adequate dispute resolution and complaint handling procedures; and

a need for ongoing dialogue and review of the Code.

Despite divergences following the Martin Committee’s report, ABA member banks adopted the first Code in 1996. The House of Representative’s Standing Committee on Banking, Finance and Public Administration initiated a review of the Code that was published in the Reserve Bank’s 1992-93 Annual Report. When conducting the review the Committee recognised the Code, initiated in 1993, was a major step forward in improving the bank/ customer relationship.

However, the Committee acknowledged the Code was limited, being too narrow in application.

Senate Committee Report webpage (Sub No. 90): Click Here…

The Martin Committee’s report attracted the attention of the ABA and received a negative response. In an interview with Channel 9 on 20 June 1993, Don Argus, Chief Executive, NAB and Chief Officer ABA called the draft Code prepared by the government task force a complex document. His criticism wasn’t directed at the Parliament’s objectives, it was at the cost of implementing it. He stated the cost of implementation would be approximately $300 million.

Mr Argus continued to undermine the cost of introducing a Code, stating ‘if civil penalties were attached, then whoever is doing business is going to have to cover themselves for the potential of very large claims on civil penalties [if bankers act dishonestly].’ Mr Argus was apparently concerned banks would lose their significant advantages in the courts. He defended the banks position, expressing disappointment with the lack of a better understanding of the principles of commercial and prudential law in place.

Wearing both hats, the NAB – ABA Chief suggested the existing law was not comprehensive and added ‘if the Australian public believes there should be re-regulation of the banking industry, then there is a formal process to go through, and that is to legislate through Parliament’.

In applying the rights of customers in the industry in 1993, the Martin Committee was faced with interpreting the relevant commercial laws, and the inability of these laws to protect the customers when the first Code was drafted.

Bankers: Relationships with Customers

Banks enter into agreements and relationships with customers, providing a myriad of products and services. At the heart of this relationship lies a promise. Assuming proper formation and constitution, this bank/ customer relationship will be governed by the general principles of contract law, which assumes all parties are autonomous agents and have equal bargaining powers.

Therefore both parties retain a capacity to freely bind themselves to legal obligations towards the other. Put simply, there has been an offer by one party, an acceptance by the other, and these actions are sufficiently certain to become legally binding. The intention to form legal relations must therefore be present for both parties and consideration must be exchanged.

Any vitiating factors such as misrepresentation and unconscionable conduct must be absent. This reports demonstrates how the banks intended the Code to undermine this relationship.

Bankers: Contractual Duties

A contractual relationship exists between a bank and its customer when the customer agrees to open an account, take a loan or purchase a financial product. A duty of care arises between a bank and customer where a contract expressly states the bank will exercise reasonable care in performing its contractual obligations. The duty of care may also arise if it is implied into the contract by the courts. This frequently happens in relation to performance of professional obligations.

Assuming a contract exists between a bank and customer, the actual terms of the contract may not be entirely clear. Firstly, while the express terms and conditions of a contract will generally be paramount, they are subject to relevant statutory duties and obligations. For example, there are implied contractual terms contained in provisions prohibiting misleading and deceptive conduct and unconscionable conduct in both the Trade Practices Act 1974 (Cth) and the Australian Securities and Investments Commissions Act 2001 (Cth). These have been increasingly litigated in recent years.

In addition to misleading and deceptive conduct the courts have implied many terms and conditions on the basis of business efficacy or necessity. Courts approach such cases with differing presumptions, depending on the nature of the transaction.

Such obligations arising within a contractual relationship will not be valid prior to its formation and will cease to bind parties where the contract is validly terminated, or when the customer becomes bankrupt or is liquidated. This means the customer’s ability to pursue banks in court for breach of such provisions is limited by the point at which the contract was formed and terminated, and by the terms of the contract itself. These are often numerous and difficult to understand for non-legal practitioners.

There may be other legal obligations that co-exist or exist regardless of contractual duties.

Bankers: Duty-of-Care

A duty of care may arise in tort either contiguously with or irrespective of an existing contractual relationship, such as when the bank adheres to contractual terms but its actions are negligent and cause harm to the client. Banks and financial institutions are therefore likely to come under a duty to exercise ‘reasonable care’ prior to forming a contract. Since the case of Hedley Byrne & Co Ltd v Heller & Partners Ltd. this has included negligent misstatement of financial products offered by the bank, and may give rise to an action in damages for pure economic loss.

Ultimately it is up to the court to make the decision as to whether, as a matter of policy, the financier owes a duty of care to the customer. Where the financier is specifically requested to advise, a duty to do so with due care and skill will likely arise, but the less vulnerable the client and the more tenuous the relationship with financier, the more difficult it will be to establish a duty.

If a duty of care is established, the responsibilities incumbent on the bank will depend upon the circumstances that exist and will be adjusted according to the seriousness of the risk involved. Without legal assistance, it is usually difficult for any complainant to determine what duties the bank owes.

Compounding these difficulties is the fact that establishing a legal claim against a bank for breach of duty of care requires the complainant to go through an arduous process of obtaining evidentiary documentation from institutions. In doing this, the complainant will likely find the bank will not cooperate and is willing to use its vast resources to draw out the litigation.

Bankers: Fiduciary-Duties

A fiduciary relationship on the other hand is distinct from a tortuous duty of care in that the banker/ customer relationship may be recognised as such and will depend on the circumstances. This is particularly relevant where there is ‘an inequality of bargaining power and the scope for one party unilaterally to exercise a discretion or power may affect the rights or interests of another party and that a dependency or vulnerability on the part of one party that causes that party to rely on another’.

A fiduciary duty is more likely to exist the more immediate the relationship (ie: the bank was not conducting business with the customer through intermediaries), and the customer did not have independent advice. Where the role of advisor is assumed, fiduciary duties of care will exist however, it is likely to be restricted to issues the banker was employed to advise on.

Bankers: Duty Not-to-Mislead

Financial service providers are subject to statutory obligations to not engage in misleading or deceptive conduct, or conduct which is likely to be misleading or deceptive. These provisions were contained in the Trade Practices Act 1974 (Cth) when the 1993 Code was created, but later transferred to the Australian Securities and Investment Commission Act (Cth).

These obligations are much broader than obligations the common law imposes on bankers and financiers. Interestingly the general law has little role to play in interpreting these statutory protections. Rather, they set out the norm of conduct (Brown v Jam Factory Pty Ltd (1981) 53 FLR 340 at 348) which should not be interpreted according to established principles of liability under the general law since it may be offended by acts both honest and reasonable (Yorke v Lucas (1985) 158 CLR 661 at 666), is morally neutral.

Faced with applying the law and legal principles, the next chapter looks at how the Martin Committee members attempted to present the 1993 Code of Banking Practice as a contact, and to act as the foundation stone of justice in the bank/ customer relationship.

Senate Committee Report webpage (Sub No. 90): Click Here…

 

Soon after banks adopted the 1996 Code, it was clear that the introduction of enforcement mechanisms were paramount. Despite recommendations made by the Martin Committee, banking suffered from a lack of credibility and trust. At the time, the media was continuing to report incidents of banks bending rules and breaking the law.

The Code (1996) was flawed structurally and did not provide adequate incentives for banks with good intentions to implement it as a set of agreed principles and binding practices. Accountability and transparency of the complaints resolution process, in a deregulated banking environment, was essentially left to courts to enforce. The banks defective contractual provision in the Code was an outcome that most customers could not afford.

The Wallis Inquiry’s Report

Recommendations of the Financial System Inquiry (the Wallis Inquiry) and the House Standing Committee on Industry, Science and Technology’s report ‘Finding a Balance: Towards Fair Trading in Australia’ were meant to require the government to promote institutional integrity in banking. This would happen with co-regulation and the regulatory bodies with powers to enforce codes of practice. With co-regulation there could be legally binding regimes with powers to enforce consumer protection for individual and small business customers of banks.

The Wallis Inquiry’s recommendations included forming strong national regulatory bodies with wide-ranging responsibilities, and empowering them to enforce consumer protection and safeguards in the banking industry. The ‘Finding a Balance: Towards Fair Trading’ report recognised the presence of unfair conduct between big and small businesses, and this was potentially a major worry for efficient markets.

This was raised in several government inquiries but never actually addressed. The mega-banks were allowed to introduce their own system of self-regulation, a decision generally not accepted. This meant small business was forced to turn to the courts when banks failed to adhere to their own self-regulated codes and rules.

The Wallis Inquiry report was designed to review the effectiveness of the financial sectors reforms, which had taken place through the 1990s. The 1997 report contained 115 recommendations on a wide variety of financial system issues. It concluded stating market regulation in the banking industry should be directed at sectors rather than to particular institutions, with a number of government institutions required to successfully monitor the self-regulated industry.

Corporate and Financial Services Commission

A major recommendation by the Wallis Inquiry was the establishment of a national regulatory body. This was called the Corporate and Financial Services Commission, which later became ASIC.

The Commission would oversee ‘corporations and financial market’s integrity, and consumer protection’. This meant it would combine the market integrity and consumer protection roles of the Australian Securities Commission, Insurance and Superannuation Commission and the Australian Payments System Council.

The Wallis Inquiry’s report recommended the Corporate and Financial Services Commission should have sole responsibility for administering consumer protection regulation in the banking and finance sectors. It would therefore be responsible for relevant provisions under the Trade Practices Act 1974 (Cth) for the prevention of fraud.

The Wallis Inquiry’s report recommended the Corporate and Financial Services Commission should have powers:

to obtain documents and question persons, and accept legally enforceable undertakings;

for protection from liability for persons who provide investigative assistance;

to impose administrative sanctions, such as banning or disqualification orders;

to initiate civil actions and to seek punitive court orders such as financial penalties and a range of remedial court orders; and

to initiate and to refer matters to the Director of Public Prosecutions for criminal prosecution.

Australian Prudential Regulation Commission

Another major recommendation in the Wallis Inquiry was creation of the Australian Prudential Regulation Commission. Its role was to carry out prudential regulation in the financial system.

The Wallis report proposed the Australian Prudential Regulation Commission should have powers under legislation to establish and enforce prudential regulations of approved and licensed financial entities and decisions of the Corporate and Financial Services Commission should not be subject to administrative or other reviews.

The Reserve Bank of Australia

The Reserve Bank was in existence at this time. However, the Wallis Inquiry’s report recommended responsibility for prudential supervision of the financial system to be removed and invested in the Australian Prudential Supervisory Commission. It further recommended a Payments Systems Board be established to ensure payments systems policy was in line with public policy aims.

Following the Wallis Inquiry’s report in April 1997, the House Standing Committee on Industry, Science and Technology published its report the following month titled Finding a Balance: Towards Fair Trading in Australia.

The Wallis committee recognised the existence of unfair conduct by big businesses towards small business. It considered this was a major worry. It stated concerns were justified and should be addressed urgently. The committee’s recommendations were therefore directed at providing any unfairly treated small businesses with adequate redress.

Finding a Balance: Towards Fair Trading

In the Finding a Balance: Towards Fair Trading report, it noted several serious business conduct issues related to small business finance. The Fair Trading report therefore focused entirely on the conduct of banking and finance institutions. Amongst these issues the Towards Fair Trading report noted lack of disclosure of loan terms and conditions by banks and the obstructive behaviour relating to the banks dispute resolution practices stood out.

For example, complaints received from small businesses in relation to dealings with more powerful firms shared common features, including:

inadequate disclosure of relevant and important commercial information which the weaker party should be aware of before entering the transaction; and

inadequate and unclear disclosure of important terms of the contract particularly those which are weighed against the weaker party, and

especially when contract terms can operate against the interests of the weaker party and are not brought to the attention of that party, and

where the full import of those [unfair] terms are not spelt out to the weaker party.

Such conduct could be illegal under legislation and common law, as it might be unconscionable or misleading, and deceptive. However, it was often difficult to enforce best standards through legislation, partly because the law was restrictive in its interpretation and application of general principles.

Deceptive and Misleading Conduct

Under s 18 Australian Consumer Law (Cth), a person [or party] must not, in trade or commerce, engage in conduct that is misleading or deceptive or is likely to mislead or deceive.

To prove deceptive and misleading conduct, it requires a victim to prove to the court that on the balance of probabilities the bank intended or was aware of falsity and/or the misleading nature of representations they made to individual and small business customers. This must be considered as one of the consequences of banks relying on two different agreements, one with their customers and the other with the Code Compliance Monitors. Such an arrangement would make it impossible for individual and small business customers to use the Code to protect their interests.

In this case, sixteen banks acted as one body, and make promises to their customers that they will comply with the Code practices.  Allegations relating to misleading and deceptive conduct arise from the unpublished bank CEOs constitution, which was in place when banks adopted Code (2004) and incorporate the Code as an undertaking in contracts they present to small businesses.

By acting to conceal the constitution from the public, the directors of the sixteen subscribing banks intentionally acted to rely on the Code Monitors inability to comply with their clause 34 duties in Codes 2003, and 2004. Keeping the constitution from customers and their lawyers meant the banks diluted the fair and prudent banking practices that were intended to represent a consensus in the banking and financial sector. The bank prepared contracts could not be relied on when customers signed the banks contracts.

At a later date, a court may find these were misleading and deceptive practices by banks relying on advice from the nations most expensive lawyers.

Unconscionable Conduct

Under s 21 of Australian Consumer Law (Cth), a person [or party] must not, in trade or commerce, in connection with the supply or possible supply of services to another person [or party] engage in conduct that is, in all the circumstances, unconscionable.

In dealing with unconscionable conduct, the mere presence of inequality is not, in itself, conclusive of any illegal conduct. Rather, inequality must be such that the individual or small business ‘suffered from an inability to protect its interests if the bank was sufficiently aware of its inability, and takes advantage of the individual or small business weaker position’. Hence, there will have been many cases when banks had a duty to disclose the efficacy of their Internal Disputer Resolution practices and Code Compliance Monitors code compliance and complaints handling procedures.

While courts must be satisfied merely on the balance of probabilities rather than the higher criminal standards of beyond reasonable doubt, it requires individuals and small businesses to prove a hypothetical alternative. For instance, damage would not have occurred had the bank investigated the complaint and not acted in the way it did.

Banks Rely on Weaker Party’s Inability to Protect Interests

Both false and misleading conduct and unconscionable conduct are difficult to prove in terms of evidentiary availability and because customers proving they relied on such conduct. This can prove extremely costly.

The legislators had to incorporate big business powers in its dealings with small business whilst maintaining efficient markets. Using courts was out of reach for most customers, whilst the banks and ABA introduced measures to paralyse investigations into unfair and potentially fraudulent bank conduct. All possible because banks knew the public could not fund litigation to enforce the fair trading provisions.

Few individual or small businesses could absorb the cost or justify the risks associated with running a long-drawn-out court case that would potentially cost many millions of dollars. The banks have now become mega-corporations, operating without oversight by effective regulators.

Senate Committee Report webpage (Sub No. 90): Click Here…

The Australian Securities and Investments Commission Act 1989 (Cth) was established with functions and powers articulated in the ASIC Act 2001 (Cth). Many of its functions and powers are referred by the Corporations Act 2001 (Cth) and Corporations Regulations 2001 (Cth).

Fair Trading Amendments to the Act 1974 (Cth)

The Wallis Inquiry and ‘Finding a Balance: Towards Fair Trading’ reports were published at about the same time in 1997. Parliament was therefore able to take stock of their recommendations.

In 1998, amendments to the Trade Practices Act 1974 provided a general power to make industry codes of conduct enforceable. At the same time, Australian Competition and Consumer Commission had a duty to ensure industry participants comply with code provisions and take action against code breaches.

Member from McEwen, Fran Bailey, recognised many of the issues raised by the Fair Trading report and committed the government to ensure small business owners could confront problems without inherent unfairness and inequalities.

The Federal Minister had authority under the Trade Practices Act 1974 to consider initiating a proposal for the prescription of any industry code of conduct, if:

the code would remedy an identified market failure or promote a social policy objective;

the code would be the most effective means for remedying that market failure or promoting that policy objective;

the benefits of the code to the community would outweigh any costs; and significant and irremediable deficiencies in existing self-regulatory regime;

systemic enforcement issues exist because there is a history of breaches of voluntary industry codes; and

a range of self-regulatory options and light-handed quasi-regulatory options have been examined and demonstrated to be ineffective.

The principal body responsible for ensuring effective operation of the codes is ASIC. It can approve codes, sets standards for Internal Dispute Resolution, sets standards for and approve External Dispute Resolution processes and bodies that must be utilised in the event of an Internal Dispute Resolution failure.

ASIC can investigate complaints not resolved within External Dispute Resolution schemes. If a breach of these schemes is found, ASIC can distribute penalties under the Corporations Act.

However, it was suggested ASIC had not taken up this role with any apparent zeal. Despite originally being statutorily bound to enforce codes of practice in the banking and finance sector, ASIC consistently characterised codes as non-enforceable.

Amendments to the Trade Practice Act 1974

In August 2000, the Treasury Taskforce on Industry Self-Regulation reported on recent developments in Australia whereby industry self-regulatory schemes were incorporated into regulatory frameworks. The Self-Regulation Taskforce was commissioned by the Minister for Financial Services and Regulation, Joe Hockey, in order to provide information to government, industry and consumers about best practices for industry self-regulation.

The objective of the taskforce was to reduce the regulatory burden on business, to identify best practice and to improve market outcomes for consumers. The Self-Regulation paper stated government is presently in the process of developing and implementing regulatory regimes in the financial services sector, allowing for the development of industry codes and complaint handling schemes.

The Minister for Financial Services and Regulation recognised there would be situations where ‘industry self-regulatory schemes may need to be underpinned in legislation…’

Dispute Resolution 101

One of the major issues raised was unfair conduct by banks when handling individual and small business disputes. Banks exploited their ability to engage the best and most expensive legal advisers to prolong cases, knowing small businesses were commonly unable to match the mega-banks financial resources.

According to the Taskforce report, a general perception existed that the prevalent attitude of banking and financial institutions towards dispute resolution was: “We’ll see you in Court – take it or leave it”.

The prevalence of such an attitude caused ‘Australians for Banking Justice Association’ to call for the establishment of an independent body to hear, judge and determine claims of commercial customers. Despite these concerns, substantiated by examples of real experiences, the ABA insisted existing legislative protections were adequate. The ABA opposed reform, including the common law equitable doctrines of economic duress and undue influence, and the TPA 1974 (Cth) provisions relating to unconscionable conduct and misleading and deceptive conduct.

In 2000, ASIC had been instrumental in ensuring banks complied with the Code and their duty to commission regular reviews. ASIC made submissions to Richard Viney, the person commissioned to carry out the first review. The Viney report is discussed elsewhere in this paper however banking practices and complaints handling remained paramount.

2001: ASIC’s Deputy Chair, Jillian Segal

In November 2001, ASIC’s Deputy Chair, Jillian Segal, paradoxically discussed how ASIC sees itself as a regulator at a time of industry self-regulation:

Following the Wallis Inquiry’s report in 1997, we have seen many changes to Australian regulatory landscape. These not only include the establishment of ASIC and APRA, but changes to the Corporations Law (now known as the Corporations Act). In some cases, the shift has been away from prescription to relying on disclosure.

In other areas, an emphasis has been placed on compliance systems. In one sense, these changes represent shifts to greater self-regulation within a framework over sighted by ASIC, its regulator.

On 7 September 2004 Jillian Segal was appointed director, National Australia Bank. This was four months after the National Australia Bank adopted Code (2004), and seven months after subscribing banks documented their Code Compliance Monitoring Committee’s constitution. In light of the NABs directors’ decision to promote being bound by the Code and its dispute resolution procedures, Ms Segal’s roles raise a lack of commitment by her and other NAB directors to fair and honest banking.

Institutional Weaknesses

In contrast to Ms Segal’s 2001 assertions, in 2003 ASIC announced that it no longer monitored compliance of banking Code (2003). In Regulatory Guide 183 ASIC separated voluntary and mandatory codes and in an internal policy statement noted it no longer approved voluntary codes such as banks Code (2003).

In doing so, and mindful of the changed banking culture during the David Murray/ Gail Kelly and John McFarlane/ Gail Kelly ABA periods, ASIC justified its position, stating:

It is not mandatory for any industry in the financial services sector to develop a code. Where a code exists, that code does not have to be approved by ASIC. However, where approval by ASIC is sought and obtained, it will be a signal to consumers this is a code they can have confidence in. An approved code will respond to identified and emerging consumer issues and delivers substantial benefits to consumers.

In a later report, ASIC detached itself from its regulatory function. It recast its role as limited to working with industry to develop or update codes, approving independent external dispute-resolution schemes and liaising on a formal and informal basis with stakeholders representing consumer interests through a Consumer Advisory Panel that met quarterly.

Chairman, ASIC during this initial this period was David Knott.

ASIC: Unwilling To Use Its Powers

ASIC’s willingness to exercise powers has been uncertain. Lack of transparency in decision-making means consumers receive minimal guidance on how to utilise the ASIC provisions to their benefit. For example, the ASIC Act (Cth) prohibits unconscionable and misleading conduct, as a measure of consumer protection in relation to financial services.

Federal Member for New England Tony Windsor sought to review this inconsistency without success. The Federal Member asked ASICs Minister:

What action is ASIC taking to enforce the ASIC Act in respect of the revelations to the Parliamentary Committee on Corporations and Financial Services that a solicitor for Commonwealth Bank made false representations to a Parliamentary Hearing about the disputed balance of a customer’s account?

Will the Minister explain the Government’s and ASIC policy on ASICs intervention in [some] cases and can he say whether ASIC leaves it to the customer to take private legal action even when ASIC is aware that a bank has engaged in false and misleading conduct.

Can the Minister explain obligations banks have to act in accordance with their industry code and if a dispute arises whether the banks must offer dispute resolution to customers under the Code of Banking Practice before taking legal action?

Does ASIC have evidence banks have not been providing dispute resolution to their customers before taking legal action against them despite their obligation under the Code of Banking Practice to do so?

Why has ASIC not taken action against any bank for failing to adhere to the Code of Banking Practice for not providing dispute resolution to customers as banks are obliged to do under the code?

The response by ASIC was that relevant answers are unable to be provided.

Passing the Poison Chalice: Does it Stop

The Finding a Balance: Towards Fair Trading report stated the Commonwealth, States and Territories have legislative provisions capable of underpinning industry codes. This assumes self-regulation had failed and individuals and small business had other effective legal mechanisms to obtain justice if banks acted unlawfully, or bank directors breached Trade Practices legislation.

Governments, State and Federal, can provide an incentive for banks to employ non-litigious resolution with customers. In light of considerable resources at the disposal of these institutions, this is an unreasonable assumption. In this context, it is not surprising where a system of co-regulation becomes one of self-regulation, through default of government and regulators, consumers will be disadvantaged no matter how many additional legislative protections customers are afforded.

Senate Committee Report webpage (Sub No. 90): Click Here…

In a statement made on 2 September 1997, Treasurer Peter Costello said the Wallis Inquiry found the Australian financial sector’s performance was close to the world average, rather than among world’s best.’ In response the government introduced a package of legislation, establishing regulatory bodies to enforce new industry codes and to monitor compliance with legislative obligations:

The package of Bills before us gives effect to major changes to the structures of regulatory bodies by establishing two mega-regulators, the Australian Prudential Regulation Authority and the Australian Securities and Investments Commission, lovingly known as APRA and ASIC. The government is therefore changing the regulation of financial services markets – for example, collective investments, superannuation, company law, Corporations Law, payments systems, financial sector shareholdings and banking, and at the same time changing the regulatory bodies themselves.

In doing this, the key recommendations of the Wallis Inquiry and the ‘Finding a Balance: Towards Fair Trading’ committee were not reflected in the government’s scheme. Rather, the government set in motion the creation of regulatory authorities with little to no real powers over the conduct of big business and banking.

By seeking to keep separate regulation of consumer protection and regulation of prudential supervision, Wallis Inquiry made comprehensive recommendations that could not be contemplated. ASIC, APRA and the RBA were envisaged, together, to uphold a scheme of co-regulation in the banking and finance sector.

Together ASIC and APRA would monitor and enforce compliance with the Code, as well as consumer protection and prudential law. Due to fundamental flaws establishing these Acts, and lack of resources and political will, ASIC and APRA were left with no real enforcement powers within their jurisdictions.

The Financial Sector Reform Act 1998 (Cth)

The following year, the Financial Sector Reform (Amendments and Transitional Provisions) Act 1998 (Cth), in part, carried out Wallis Inquiry’s recommendations creating the government regulator APRA, and expanded the responsibilities of the Australian Securities and Investment Commission. ASIC was designed to oversee enforcement of the system of market regulators, including monitoring compliance with the Code of Banking Practice. This was removed from the jurisdiction of the Australian Payments System Council, noting:

The Australian Securities and Investment Commission has the function of monitoring and promoting market integrity and consumer protection in relation to the payments system by promoting the adoption of approved industry standards and codes of practice, protection of consumer interests, community awareness of payments system issues, sound customer-banker relationships (including through monitoring the operation of industry standards and codes of practice) and compliance with such standards and codes.

With this provision forming part of the Australian Securities and Investments Commission Act 2001 (Cth), ASIC continues to be the monitoring body, bound to ensure compliance with most industry codes.

The APRA Act 1998 and Amendment Act 2003

The general powers of the APRA Act sets out the framework for its operation, as well as establishing its powers and functions. The Act established APRA with three main purposes to:

1. Regulate bodies in the financial sector in accordance with other laws of the Commonwealth that provide for prudential regulation or for retirement income standards.
2. Administer the financial claims schemes provided for in the Banking Act 1959 (Cth) and the Insurance Act 1973 (Cth).
3. Develop administrative practices and procedures to be applied in performing the regulatory role and administration.

In the Second Reading Speech on the Australian Prudential Regulation Authority Bill 1998, Treasurer Peter Costello announced the intention of the legislation was to put in place a structure designed to improve efficiency and competitiveness of the Australian financial system, while preserving its integrity, security and fairness. The government sought to replace various agencies charged with prudential supervision of financial systems within a single regulatory authority.

APRA’s jurisdiction would be to supervise:

banks and other deposit-taking institutions; and

life and general insurance companies, and

superannuation funds and retirement income accounts.

APRA was to be an independent regulator like the Reserve Bank, but subject to policy determination powers of the Treasurer in the event of an irreconcilable disagreement with the government. It was emphasised in Parliament that by having a single regulator at arm’s length (in the same way as the Reserve Bank operates autonomously of government’s decision-making), consumers would be provided stability and independent supervision.

However, the final APRA Act 1998 did not provide the level of independence envisaged.

Lack of an Independent Board

It was suggested that APRA should be accountable through an independent board, and operate under a charter to ensure prudential regulation was balanced with considerations of efficiency, contestability and industry competition. The APRA Bill envisaged the three main functions for the board, which was to:

1.     determine APRA policies (including goals, priorities, strategies and administrative policies); and

2.     ensure APRA performs its functions properly, efficiently and effectively, and

3.     ensure APRA operations are conducted having regard to its purposes.

The APRA Board would comprise nine members: a Chair, CEO, two members (to include either the Governor or Deputy Governor of the Reserve Bank or an officer of the Reserve Bank Service), one member who is an ASIC representative and four other members. The Board briefly functioned like this after the establishment of APRA in 1998, and after the HIH collapse, however a subsequent Royal Commission prompted the revision of its structure through amendments to the Act in 2003.

The present APRA Act provides for a smaller but potentially less independent team, more open to manipulation by a confluence of private and public interests. The APRA members comprise people appointed by the Governor-General on a full-time or part-time basis.

The appointment of the APRA Chair and Deputy arrives directly from the Governor-General, who, by constitutional convention, acts upon the recommendation by the Prime Minister. In essence, the restriction on the number of members narrows the potential for representation from key stakeholder groups and the hierarchy in APRA may now be heavily influenced by the government of the day.

While members are limited to a five-year term, the APRA Bill should be regarded as positive. It reinforces a need for the government of the day to gain influence, as it has the potential to roughly correlate to electoral terms. To guarantee independence from the private sector, the APRA Bill limits the appointment of anyone who is a director, officer or employee of a body regulated by APRA, and the member’s appointment is terminated if they become an officer or employee of an APRA regulated body.

However, under the Act, directors, officers or employees of bodies regulated by APRA may be appointed if the Minister considers their performance will not be compromised. While members are required to disclose interests that could conflict with the performance of the functions of office, it does not prevent a member from being involved in dealing with an issue once they obtain consent of the other APRA members.

Subordinate to Government Interests

In the APRA Act, the relationship between APRA and the Minister for Financial Services provides the government greater leverage over internal policy. Under the Act, the Minister is empowered to give APRA a written direction with regard to policies it should pursue or the priorities it should follow.

The Chair is provided an opportunity to discuss with the Minister APRAs proposed direction. However this is a far more interventionist approach than initially envisaged when the APRA Act was put forward in the Bill. It puts in place a less stringent reporting process because the Minister must publish the direction of the board in the Gazette within 21 days after the direction is given. This must then to be laid before Parliament within 15 sitting days.

The ASIC Acts 1998 and 2001

The general powers of ASIC and its responsibilities relate to market integrity and consumer protection. It was established following recommendation of the Wallis Inquiry under guiding principles of competition and consistent regulatory treatment in the industry. The intended function of ASIC is to monitor and promote market integrity and consumer protection in the Australian financial systems and payment systems, as well as the operation and compliance of industry standards and codes of practice.

In the area of banking and finance ASIC is intended to supplement APRAs prudential role by considering the impact on consumers when prudential systems are absent or neglected.

ASIC has a broad range of investigative powers to undertake, as its role is essentially whatever’s necessary for or in connection with, or reasonably incidental to, performance of its functions. This includes powers to obtain books and records, examine people and require people to give reasonable assistance to it in connection with an investigation or prosecution.

Senate Committee Report webpage (Sub No. 90): Click Here…

On 12 May 2000, the Australian Bankers Association appointed Richard Viney to conduct a review of Code (1996). The ABA Chairman was Mr Frank Cicutto, Chief Executive, National Australia Bank.

In undertaking the review, Viney was asked to take account of changes in the market for banking services and the changing behaviours of bank customers. The ABA, in all likelihood, believed banks adopting Code (2003) would lead to banks and individual and small business customers benefiting from responsible self-regulated banking.

The newly appointed ABA Chief Executive, David Bell was confident this second generation Code would be an effective demonstration to Government’s policies and demonstrate self-regulation works. He is reported to have said this is a real alternative to the heavy hand of legislation, a dubious statement as it later turned out

There were submissions to the Viney review from government agencies, consumer groups and banks. Richard Viney’s Issues Paper with interim recommendations was published and once the Issues Paper submissions were received, he published the Final Report.

There were differing views about appropriate monitoring, and the powers the Code Compliance Monitors would possess, and sanctions they could impose. Richard Viney’s final recommendations ended up being in line with those taken from the bank CEOs organisation, the ABA.

The Richard Viney recommendations, detailed below were:

1. inclusion of small business
2. principles of fairness
3. monitoring of sanctions
4. dispute resolution; and
5. periodic review and a forum for regular exchange.

The first three recommendations are dealt with in this section.

Inclusion of Small Businesses

The Code (1996) applied only to individuals. However, in light of the extension of coverage of the FOS, to cover small businesses, the review considered extending the coverage of the Code to small businesses.

ASIC favoured the extension to include small businesses out of recognition of small business customers being disadvantaged in their bargaining position when dealing with mega-banking organisations. The NSW Government, in its presentation to the Joint Consumers Submission, also favoured extending the Code protection to small business customers.

The ABA did not object to the extension. Richard Viney finally recommended Code (2003) cover all small businesses. Code (2003) defined small businesses as having fewer than 100 full-time people or their equivalent, if the business is or includes manufacture of goods, or, in any other case, fewer than 20 full-time people.

Principle of Fairness

The Code (1996) did not contain a provision on fairness. Actually, for Code (2003) the ABA sought to exclude fairness. It resisted including the provision on the grounds that it was a subjective concept and will vary from circumstance to circumstance.

However, the ABA eventually withdrew its objection to the fairness provision and Mr Viney recommended a subdued provision in Code (2003). The new clause stated banks will act ‘fairly and reasonably towards customers in a consistent and ethical manner. In doing so we will consider your conduct, our conduct and the contract between us’.

Monitoring and Sanctions

The importance of monitoring and sanctions were the most controversial issues in the review process. During the period monitoring was carried out through the Australian Payments System Council, it involved an annual self-assessment by banks, which was followed by an ASIC report on the results of the self-assessment process.

In the Joint Consumers Submission, the Australian Consumers Association, ASIC and the NSW Government objected to lack of transparency and independence of monitoring in Code (1996). For their part, the ABA acknowledged the need for change while avoiding inefficiency and disproportionate cost.

ASIC noted the importance of external monitoring to complement the self-assessment process. The Joint Consumer submission’s continued to argue that the inadequacy of self-assessment of compliance monitoring called for validation of results to be carried out by an independent external body.

The Consumers Association promoted the need for compliance monitoring to be adequately resourced. The NSW Government’s submission stated:

It is important that monitoring and reporting on the Banking Code of Practice is carried out by an organisation with experience in consumer banking issues, and which is seen to be independent of the banks. The Australian Securities and Investment Commission is one such agency. Compliance with the Code should be able to be independently double checked, and not rely entirely on a bank’s self-assessment.

It was suggested that some parties were dissatisfied with lack of a provision in the Code for the imposition of sanctions for breaches. ASIC, for one, cited other industry codes such as the ‘General Insurance Code of Practice’, which established a regime for investigating alleged breaches and for imposing sanctions. This regime complemented both internal and external dispute-resolution procedures for resolving bank/ customer disputes. ASIC stated:

this review should consider establishing an independent regime for investigating alleged contraventions and imposing appropriate sanctions;

the code should detail who can make complaints about non-compliance, this should include consumers, consumer advocates, regulators and government agencies and dispute resolution schemes;

the process for making complaints; the decision-maker(s) and the decision-making process; and

available sanctions including a range of effective sanctions should be available so a flexible approach can be taken.

The Consumers Association cited the December 2000 Taskforce on Industry Self-Regulation’s report, which argued for sanctions underpinned by regulatory mechanisms that it regarded was essential for Code credibility. The Australian Consumers Association stated:

The lack of sanctions in the banking code presents a fundamental weakness and raises doubts about the credibility of the code for industry participants and consumers. For example, there are no sanctions for breaches such as refusing to tell a customer about dispute mechanisms, not providing information on a request or not following customers instructions in relation to account cancellation. A range of sanctions, underpinned by regulatory mechanisms, is essential for code credibility.

The Joint Consumer submission also argued for including sanctions, citing comparable codes, such as the AAMI Customer Charter, which had penalty provisions. The Joint Consumer submission stated:

For a complaints process to be effective consumers must use it. However, unless they can establish a loss which opens the way for compensation, the consumers will generally not have any, or a sufficient incentive to report breaches of the code to the (proposed) administration body.

One way of addressing this issue, and in doing so providing industry with a cheap compliance-monitoring mechanism, would be to include in the code a penalty provision under which the subscriber would agree to pay a small sum to any customer whose complaint that a code provision had been breached was established. This sum would be paid irrespective of whether the customer suffered any loss or damage in consequence of the breach. The AAMI Customer Charter provides a possible model for a penalty provision of the kind proposed.

Richard Viney agreed. Without an independent regime for investigating complaints of Code contraventions, and without a capacity to impose appropriate sanctions, the banks commitment to the Code appeared to be perfunctory.

Senate Committee Report webpage (Sub No. 90): Click Here…

Events in 1993 when the first Code was being drafted, it led government and banks to assess the effectiveness of self-regulated banking. It was claimed banks needed to put in words their practices while providing an effective mechanism for monitoring complaints and incorporating effective dispute resolution procedures.

This required a straightforward evaluation by banks placing in front of government a commitment to comply with agreed practices and underwrite self-regulation. The banks had to convince the government and public they would introduce a transparent and effective self-regulated structure with honest and fair systems to ensure practices would benefit customers.

Based on guarantees by the banks, the practices set out in the new Code (2003) were acceptable to individual and small business advocates providing, of course, that the banks compiled with the key commitments and obligations in Part B of the Code. The public and government were cast in a role whereby they had to trust bank directors to deliver banking commitments set out in clause 2.1, including an undertaking to use plain language.

Directors Guarantee to Comply with New Code (2003)

Following the publication of the new Code on 1 August 2003, bank directors knew that the promises regarding principles and practices in Code (2003) were problematic. Despite this, they were willing allow the banks to make pubic statements that they would adopt the new Code and deliver promises contained in it.

The directors of the following banks were first to make a commitment their bank would stand by the commitments in Code (2003):

Adelaide Bank Limited – 12 August 2003

Australian and New Zealand Banking Group – 12 August 2003

Bank of South Australia – 12 August 2003

Commonwealth Bank of Australia – 12 August 2003

St George Bank Limited – 12 August 2003

National Australia Bank Limited – 29 August 2003

Bank of Queensland Limited – 7 October 2003

ING Bank (Australia) Limited – 3 November 2003

Bank of Western Australia – 19 January 2004

Citibank Australia – 5 April 2004

HSBC Bank Australia – 10 May 2004

Champions of New Code (2003)

On 1 August 2003 when Code (2003) was published, Australian Bankers Association records noted:

John McFarlane(Chief Executive, ANZ Bank) had replaced David Murray (CBA) as ABA Chair on 17 June 2003, and

Gail Kelly(Chief Executive, St George Bank) had replace Ed O’Neal as Deputy Chair, and

David Bell,ABA Chief Executive and non-bank member.

Code (2003) required the eleven subscribing banks to comply with clause 35.7 and investigate all complaints. It was anticipated that the banks and its bank funded partner, the FOS, would appoint independent Code Compliance Monitoring Committee members to monitor compliance with the Code’s fair and prudent banking practices.

Whilst this was happening, the banks were using the ABA public relations network to promote their commitment to investigate all customer complaints. This was reinforced under the Code when Compliance Monitors were being appointed.

Supporting the subscribing bank promises and reinforcing their commitment to the Code principles, was an understanding the Code Compliance Monitoring Committee would investigate and make a determination on any allegation from any person that a code subscribing bank breached the code’

However, shortly after new Code was published, and banks adopted it, the many commitments made by them in the Code were found to be untrue. Directors of the eleven banks adopting the new Code watched as the ABA commenced a hard-hitting media campaign, whilst remaining silent on the use of ambiguous words undermining it.

Non-bank people would have had no idea that shortly after banks made a commitment to the ABA to publish the new Code they were setting in place the Code Compliance Monitoring Committee Association. The association members included only CEOs of subscribing banks and they had a different set of rules. This well kept secret of banks had the effect of varying a few key-principles set out in the revised Code. As noted earlier, a little vinegar sours the wine

New Code (2003) Declarations

It was clear subscribing banks and their directors wanted the public and customers to believe was what the ABA public relations team was telling them. This was summed up in statements made by the industry body, the Australian Bankers Association, after the McFarlane -Kelly code was published on 1 August 2003. The architects of new Code stated, banks:

Must be sure they are ready to comply with their obligations under the revised Code before they adopt it because the Code is an enforceable contract between the bank and the customer.

The Code is a voluntary code in the sense a bank has a choice whether or not to adopt it. Once a bank has adopted the Code, it binds the bank contractually to the customer. So if a bank breaches the Code, it has breached its contract to the customer.

This Code meets and beats similar codes in other countries such as the UK, Canada, New Zealand and Hong Kong. The ABAs Code stands out both in scope and the specific customer benefits it provides.

Banks will submit to independent monitoring of compliance and if a bank has systemically or seriously breached the Code it is liable to be publicly named.

Each subscribing bank will lodge an annual report with the Code Monitors on its compliance with the Code in much the same way as banks have done under the original 1993 Code in reporting annually on compliance to ASIC.

David Bell, Chief Executive of the ABA and Jillian Segal, Chair of the FOS, published a joint statement by their organisations announcing the appointment of Mr Tony Blunn, AO, as Chairman of the independent Code Compliance Monitoring Committee for monitoring banks compliance with the Code.

The Code Compliance Monitoring Committee will have a very important role, especially when it comes to taking action against a bank the Code is contractually binding, so a regulator might even consider action of its own.

The Compliance Monitoring Committee will be able to receive complaints from anyone who thinks that a bank has breached the Code. They will have powers to investigate any complaint and decide whether a breach of the Code has occurred.

Mr Blunn emphasised the independence of the Code Compliance Monitoring Committee who he believed had an important role in the broader structure of governance arrangements of the banking sector.

The statement must have been intended to send a message to legislators, regulators and the public that the new Code was an enforceable bank/ customer contract and that banks would submit willingly to being independently monitored.  The Code Compliance Monitoring Committee members, being independent, and the regulators might be willing to take an action against any rogue banks or bankers. The rhetoric had the effect of making the public believe that the eleven banks would faithfully lodge an Annual Code Compliance report with the Code Members.

All worthy principles, assuming of course that the Code Compliance Monitoring Committee members were in fact independent and the Code was an enforceable contract. Later, it appears the rhetoric was only ‘spin’ and not commitments made by the eleven subscribing banks.

Modified Code (2004) Declarations

On 14 May 2004, the subscribing bank directors and banks authorised the Australian Bankers Association to publish modified Code (2004), while the banks were publicly congratulating themselves on having a world-class Code of Banking Practice. According to the banks and the Australian Bankers Association, Code (2004) initiated new high-standards of conduct in dealings between the banks and their individual and small business customers.

The banks and the ABA emphasised the important role of the Code Compliance Monitors, publishing information to enlighten customers and the public, that:

The modified Code (2004) makes provisions for independent Code Compliance Monitoring Committee members to investigate and monitor complaints about code breaches. All banks subscribing to the Code have agreed the monitors may be empowered to conduct their own enquiries into banks compliance with the Code. Any person may make a complaint to the Compliance Monitors about a breach of the code.

The banks adopting Code (2004) have already agreed to be monitored by the independent Code Compliance Monitoring Committee members. The ABA assured bank customers the Code Compliance Monitoring Committee members have been set up as an independent body with consumer, small business and banking industry representatives.

The bank guarantee to consumers in Code (2004) grants and confirms existing rights to customers. This included disclosure of fees and changes to terms, fees and charges; privacy and confidentiality; complaints handling and others. In fact, the banks were at pains to promote a new modified contract bound by ethics, good faith, high-principles and honesty but with no mention of ambiguous wording in the Code that banks could rely on the skirt Internal Dispute Resolution duties.

Additionally, there was no mention in the Code or in the ABA media publications about the newly introduce (unpublished) bank CEOs constitution. This was a well-guarded arrangement that limited the powers and authority of the Code Compliance Monitoring Committee members.

Likewise, there was no mention about the Code Compliance Monitoring Committee’s ability to name banks when breaching the Code. It was becoming necessary for banks to continue relying on the Australian Bankers Association public relations department to keep promoting partly truthful statements in order to keep legislators, regulators and the public on side.

The banks emphasised one of the most important commitments made when adopting Code (2003) was that: they would act fairly and reasonably towards customers in a consistent and ethical manner.  When they adopted the Code the banks doubled their declarations promoting high-principles of fair and prudent banking practices based on good intentions.

According to ASIC records, ten months after publishing the modified version of the new Code, the Australian Bankers Association was incorporated and on 20 June 2005, the directors comprised the CEOs of subscribing banks. It seems problematic that the directors of the banks could ever argue that they intended to comply with their duties under the APRA Act.

It required that directors of deposit taking institutions have:

appropriate skills, experience and knowledge,

and to act with honesty and integrity,

and to be fit and proper, and

to have appropriate governance standards.

The ASIC records note the Australian Bankers Association directors appointed on 20 June 2005, were:

John McFarlene – ANZ Bank Limited

Gail Kelly – St George Bank Limited

David Murray – Commonwealth Bank of Australia Limited

Barry Fitzpatrick – Adelaide Bank Limited

David Liddy – Bank of Queensland Limited

Daniel McArthur – Bank of Western Australia Limited

Robert Hunt – Bendigo Bank Limited

Leslie Matheson – Citibank Australia Limited

Stuart Davis – HSBC Australia Limited

John Stewart – National Australia Bank Limited

John Mulcahy – Suncorp Metway Limited

David Morgan – Westpac Bank Limited

The ASIC records also note that on 22 September 2005, CBA Managing Director, Ralph Norris, was appointed.

Shortly after Code (2004) was published, the Australian Bankers Association released a series of declarations emphasising subscribing banks commitment to the Code and to the community. The ABA reported banks value communities where they operate and have made commitments to giving something back to these communities.

The Australian Bankers Association publications stated this was evidenced by the fact that many banks acknowledge corporate responsibility and adopted programs and practices that demonstrate a commitment to social and environmental performance, as well as financial performance.

When the ABA published Code (2004) sixteen banks adopted it.  They again told the public that the Code was a contract. This was a courageous statement because bank directors had prior-knowledge of the bank CEOs constitution, probably commissioned and drawn up in the McFarlane – Kelly period prior to 20 February 2004.

The introduction of the bank CEOs constitution was a well-guarded arrangement and kept from legislators, regulators and the public. It allowed banks to use the Code to their advantage and not having to deal with individual and small business complaints because their Code commitments could always be transferred to another forum when customers alleged they breached the code.

And having to deal with breaches of the Code was not something subscribing banks would have to deal with in the short term.

Senate Committee Report webpage (Sub No. 90): Click Here…

The directors of code subscribing banks appear reckless when they promoted their commitment to new Code (2003), alleging it was a contract and promoting it as such. The directors of seventeen subscribing banks did the same in 2004, led by McFarlene, ANZ, and Les Matheson, Citibank.  They would not have supported by the Australian Bankers Association public relations machine making statements relating to revised Code (2004) if they were not satisfied the information was true and correct.

Was this a problem?

Apparently it was. Six months after bank directors had adopted the new Code (2003), researchers found evidence Mallesons had drafted the bank CEOs constitution. It weakened the Code Compliance Monitors powers and authority by removing the commitment by banks to investigate all complaints. The directors of subscribing banks dismantled the efficacy of the code by introducing the bank CEOs constitution and followed this by allowing the Australian Bankers Association to publish the revised Code (2004). Each step was authorised by a code subscribing bank director.

Was the CEOs Constitution a Problem?

It cased a problem to banks and customers.  Because principles outlined in the code and included in bank contracts with their individual and small business customers became redundant.

The might be argued banks only appointed Code Compliance Monitoring Committee members to comply with appearances of the McFarlane – Kelly Code (2003) rather then to enrich the fairness of the bank/ customer relationship. Most damaging for all small businesses was the potentially misleading commitment by subscribing banks to require the Code Compliance Monitors to investigate and make a determination on any allegation a bank breached the code.

How did Bank Directors React?   

On 31 May 2004, National Australia Bank was the first to adopt Code (2004). When doing so, it knew the constitution removed the NAB’s commitment to require Code Compliance Monitors to investigate any complaint it beached the code.  A short after NAB adopted the code, thirteen other banks followed. Again, it might be argued that directors of all fourteen banks had no intention of complying with the written words in Code (2004), in particular clause 35.7.

During the John McFarlane – Gail Kelly era, banks engineered the escape route rather then having to investigate all complaints. Clause 8.1(c) of the constitution was kept from the public, which obviously suited banks and the Code Compliance Monitoring Committee. It certainly limited the workload on the latter because it relieved them of having to comply with their clause 34 commitments.

However when Code (2004) was published in May, banks were still willing to declare it was contractually binding, stating:

The Code is contractually binding on subscribing banks. When your bank adopts the code, it becomes a binding agreement between you and your bank and comes into effect when your bank adopts the Code. It establishes the banking industry’s key commitments and obligations to individual and small business customers on standards of practice.

On adopting the Code, your bank will continuously work towards improving its standards of practice and service, and provide general information about your rights and obligations under the banker/ customer relationship. It will provide the information in plain language and act fairly and reasonably towards you in a consistent and ethical manner.

Revised Code (2004) Protects Guarantors

In May 2004, some changes were made to the Code (2003) guarantee provisions. The revised code was re-published containing only a few changes. The Australian Bankers Association, the banks PR machine, reinforced the message that when a bank adopts the Code, and if you think it breached Code (2004), a first step is to raise the issue with your bank. The PR machine stated:

The Code provides high standards of disclosure for prospective guarantors before they agree to guarantee someone else’s debt. The banks will provide important and relevant information for prospective guarantors before they commit to guaranteeing someone else’s debt.

The modifications will fine-tune the Code (2003) to ensure prospective guarantors receive appropriate and relevant disclosure. Before taking a guarantee from you, your bank must provide prominent notice to you to seek independent legal and financial advice on the effect of the guarantee.

However, the banks knew advice being provided to customers and their lawyers, was untruthful. It seemed only bank directors and the ABA, and the Code Compliance Monitors and FOS had knowledge of the bank CEOs constitution. However, this had been kept from customers since 20 February 2004.

Monitors Investigate Any Code Breach

The problematic code allowed customers and their lawyers to read a facility offer with general standard terms, bound by the Code, and agree to sign a contract. The customer and lawyer did not know banks had documented an overarching constitution and kept the changed terms from them. The customers were then invited to sign bank contracts believing:

[Subscribing] banks will have an internal complaint handling service to assist you. Code Compliance Monitors have been appointed to investigate possible breaches of the Code. Anyone can refer a possible breach of the Code to them and they will investigate complaints banks are not meeting their obligations under the Code.

The Compliance Monitors will make the final decision on a breach of the Code in a written determination to the complainant and bank. Code Monitors who monitor compliance have powers to publicly name a bank found guilty of a serious or systemic breach of the Code.

The Code gives customers rights the banks must observe. These rights cover complaints handling and provision for independent monitors to investigate complaints about Code breaches. Any person may make a complaint to the Compliance Monitors about a breach of the Code.

Each bank will lodge an Annual Report with the Compliance Monitors on its compliance with the Code.

Bank Directors and Corporate Responsibility

The subscribing banks promoted they were making major commitments to improve reporting, and consultation about social obligations. They stated:

[We] are now producing Social Accountability Charters, not as a peripheral event but as a core practice. These Charters set out what stakeholders can expect across the marketplace with banking practices, employee practices, occupational health and safety, environmental practices and so on.

Overall, the banking industry is doing a lot for empowering people with the appropriate financial skills, knowledge and information to ensure they are better placed to make informed decisions about their money and avoid being misled on financial matters. At the heart of the bank/customer relationship is trust.

It is difficult to gain and maintain trust if people are confused about the terms on which the relationship is based. Empowering people with the appropriate financial skills, knowledge and information will ensure they are better placed to make informed decisions.

It is important so customers are not misled on financial matters. Code (2004) commits banks to ensure their staff are trained to competently and efficiently discharge their authorised functions and help the customer choose banking products and services. The banking industry in Australia is widely recognised for its leadership in the area of corporate responsibility.

The directors of the Australian Bankers Association said for banks to accomplish their goals in relation to corporate responsibility, they would need to achieve this through voluntary adoption of business practices that reflect the flexible and strategic decision-making by the bank’s directors.

Fair Dealing Requires Transparency

Transparency, the desire for fair dealing, responsible treatment of stakeholders and positive links into the community get reflected in everyday bank activities and corporate responsibility practices. Your bank will give you terms and conditions either before or as soon as practicable after you take up an ongoing banking service. The Code sets out world-class self-regulatory practices.

It sets very high standards of conduct for banks in dealings with customers. The (2004) modifications will fine-tune the Code to ensure that prospective guarantors receive appropriate and relevant disclosure. The Code is designed to foster good relationships between banks and customers, including guarantors, and this is based on good standards of conduct.

The Australian Bankers Association says that the Federal Government’s proposed refinements to financial services provisions of the Corporations Act 2001 will provide better outcomes for customers. The proposals will mean disclosure of information for consumers will be better aligned to consumer needs.

Following publication of Code (2004), subscribing banks decided against publishing the bank CEOs constitution. Instead, they only published and adopted principles in the supposedly world class Code.

In these circumstances, subscribing bank directors were mindful of responsibilities to comply with the Fair Trading Act and other legislation. However directors were still willing stand-aside while their CEO’s authorised the Australian Bankers Association to male public statements regarding the efficacy of Code (2004).

The bank directors, having affirmed their commitment to Code (2004), expanded the network to second-generation bank employees, trained to innocently promote CEOs self-styled public standards.  They made pledges under Part B, clause 7(b) requiring them to train staff to competently and efficiently discharge their functions under the Code, first having adequate knowledge of the provision of Code (2004).

The revised Code (2004) included 6 sections, covering 250 clauses:

PART A: INTRODUCTION

PART B: OUR KEY COMMITMENTS AND GENERAL OBLIGATIONS

PART C: DISCLOSURES

PART D: PRINCIPLES OF CONDUCT

PART E: RESOLUTION OF DISPUTES, MONITORING AND SANTIONS

PART F: APPLICATION AND DEFINITIONS

The banks authorised the Australian Bankers Association to publish statements promoting their high-principles and code safeguards. And, throughout this period, banks managing directors managed and administered the ABA. They also acted to administer, appoint and fund the Code Compliance Monitoring Committee.

Despite having this close relationship, there have been 250 bank directors during the past nine years. All should have been aware of the many unanswered questions that related to the changed Code principles.

These changed principles were inconsistent with aspirations proposed by the Martin Committee in 1991. The changed culture followed a decision by bank directors and their CEOs to produce a code complicated by the use of ambiguous wording, despite provisions under the code that the banks key commitment in clause 2.1(d) were to provide information to customers in plain language.

Senate Committee Report webpage (Sub No. 90): Click Here…

As the Richard Viney Code review (2003) was drawing to an end, the Joint Consumer organisations and ASIC expressed a preference for having an independent, well-resourced code-monitoring agency. It would have a capacity to impose a wide range of sanctions for Code breaches.

In supporting the Joint Consumer organisations and ACIC, Richard Viney also championed the need for effective monitoring and sanctions.

Code Monitors Established

In its final response submission, the ABA agreed to the establishment of the Code Compliance Monitoring Committee and appointment of Code Monitors, with only a naming sanction for repeat offenders.

The criteria the Australia Bankers Association wanted for the monitors, included:

a Code Compliance Monitoring Committee set up within the FOS scheme and agreement by the FOS to do this would be necessary;

the function, powers and composition of the Code Compliance Monitoring Committee would be spelt out in the Code and these could change if the Code was changed;

the Code Compliance Monitoring Committee would operate separately from the FOSs dispute resolution function so as not to adversely affect that function; and

the Code Compliance Monitoring Committee would comprise three people:

One (1) having had relevant experience at a senior level in retail banking appointed by subscribing banks; and

One (1) having relevant experience and knowledge as representative of the general body of bank customers, appointed by the FOS; and

One (1) having experience in industry, commerce, public administration or government service, appointed jointly by the FOS and the banks.

The Code Compliance Monitors would employ a small secretariat to service them. All decisions about bank compliance with the Code would be the responsibility of the Compliance Monitors. To ensure the Code Compliance Monitors operated diligently, efficiently and effectively (and within their powers), they would be required to commission an independent annual audit of their activities and for that audit report to be lodged with ASIC for publication. The agreement of ASIC to perform this role would be required.

Banks would continue to prepare their own annual compliance reports and to lodge them with the CCMC.

The Code Compliance Monitors functions and powers would be to:

monitor compliance by comparing banks annual reporting of compliance with the Code Monitors experience gained through shadow shopping and the incidence of complaints from customers about banks non-compliance; and

receive complaints about breaches of the Code and refer them to the banks concerned for response and remedial action where necessary; and

report annually on the level of compliance; and

report in its annual report un-remedied, serious or systemic breaches by a bank with discretionary power to name the non-complying bank.

In the Final Report, Richard Viney ended up with a general recommendation for a monitoring mechanism and sanctions having the criteria detailed in the proposal set out in the ABA Final Response.

Dispute Resolution Procedures

The Code (1996) dealt with both internal and external dispute resolution, also called alternative dispute resolution. However, in the Joint Consumer Submission, the Australian Consumers Association and ASIC were highly critical of this. ASIC stated:

These provisions were developed at a time when IDR and ADR were relatively new concepts in Australia. However, since then, the role of industry dispute resolution and the characteristics of effective dispute resolution have advanced considerably. In the light of this experience, we take the view that the current provisions of the code are inadequate and require significant improvement if they are to meet consumers needs.

ASIC cited a survey that surfaced concerns about:

poorly trained call centre and bank branch staff,

lack of communication and consistency between different banking sections,

lack of consistency in information provided by the institution staff of banks,

lack of response to enquiries and complaints or undue delay in response,

refusal to compensate or to adjust accounts for losses suffered as a result of institutional error,

reluctance to refund overdraw fees where the overdraw resulted from institutional error, and

lack of referral to external dispute resolution in cases where a complaint or dispute was not resolved.

These allegations make reference to actions by mega-bank corporations believing they were untouched by regulators supervising compliance of fair and just laws, and were beyond reach of consumers damaged by the mega-banks dishonest actions and practices.

The Joint Consumer Submission and ASIC pointed to deficiencies in the definition of a dispute and lack of time frames for resolution of disputes at the Internal Dispute Resolution stage. Both industry bodies were concerned about an uneven level of bank compliance with obligations to make information available for effective Internal Dispute Resolution processes.

Richard Viney found wide variances in levels of compliance with Internal Dispute Resolution disclose requirements. With regard to External Dispute Resolution schemes, ASIC made favourable comments about the FOS scheme. ASIC noted that despite the absence of an express requirement for FOS to apply criteria of fairness and good industry practice, the FOS terms of reference had included this requirement.

In ASIC’s submission, it suggested the internal dispute resolution processes should be consistent with Australian Standard AS 4269-95 and that the Code lay down specific time periods for completion of investigations, and more detailed requirements for keeping complainants informed during the investigation process.

Periodic Review – Forum for Exchange

The Code (1996) required the need for a review every three years to allow interested parties to express their view. However this was based on good intentions without any details as to mechanics of the review and external representation or consultation. A number of consumer submissions criticised the failure of the process to provide for consumer and stakeholder representation in the review body.

The Consumer Credit Legal Services submission raised lack of an established forum for the discussion of banking issues by consumer representatives with the industry:

Unlike some other industries, such as insurance at a national level and the energy industry in Victoria, there is a lack of any forum where consumer representatives can raise issues with the banking industry. None of the relevant regulators, the industry association or FOS offers such a forum. There is a need for a forum in which the Code and current systemic banking problems can be regularly discussed between representatives of consumers, the industry and the FOS.

In carrying out his report, Richard Viney welcomed Consumer Credit Legal Services proposal for the establishment of a formalised forum ensuring regular discussions. The ABA Final Response supported the concept of independent reviews every three years in consultation with a range of stakeholders and reported progress on the establishment, by the ABA, of a consultative forum.

Self-Regulation: Consumers Beware

When Richard Viney was appointed to conduct the Code (2003) review, the government was conducting its own review to determine the effects of moving towards self-regulation in the banking sector.

In a speech to the Society of Consumer Affairs Professionals in Business, Minister, Joe Hockey, confirmed the government’s intentions, stating:

The government went to the last election with a commitment to encourage industry to develop effective approaches to self-regulation. Self-regulation must benefit Australian consumers. It is said to work well when it comes to good corporate governance or the regulation of markets where integrity is directly measured in shareholder value’

Minister Hockey discussed the government’s philosophy relating to consumers, and reinforced its policies stating protection is the cornerstone of our philosophy. The Minister specified four meritorious and good intentioned elements of government’s thrust towards consumer sovereignty, being:

protection, consumers must feel sure the Government has in place a legal system able to protect them,

choice, an availability of a wide range of products and services,

sufficient Information & ability to choose between products in an informed way, which will depend on the provision of information that is relevant, transparent and easy to understand, and

effective redress & an ability to quickly remedy transactions that are unfair or when standards are not met, sometimes it might be appropriate for the ACCC to use enforcement powers of the TPA.

The Minister’s belief in the effectiveness of a self-regulation model, wherein it was, in his and the government’s view, able to deliver cheap and reliable ways to solve disputes and was, above all, better for consumers. It resulted in the formation of the Task Force on Industry Self-Regulation, given responsibility of finding best practice in self-regulation that would ultimately improve market outcomes for consumers.

After completing this review, principles underpinning the belief self-regulation works best, were identified as requiring:

consultation between industry, consumers and government;

broader coverage within an industry;

effective procedures for resolving disputes with proper sanctions for businesses that breached the scheme; and

the scheme needs to be regularly reviewed by an independent body.

It might be said the outcome of the Richard Viney and Task Force on Self-Regulation reviews, together with the influence of key players within government, paved the way for government to ultimately support its shift into self-regulation.

This seems to contrast views presented to the legislators by the Martin committee and the Wallis Inquiry. However, increasing support within government apparently made it easy for banks, acting in a cartel like manner with one voice, to develop a Code that could later be argued made them accountable to no party other than to themselves.

Senate Committee Report webpage (Sub No. 90): Click Here…

The subscribing banks and Australian Bankers Association published and promoted Code (2003) based on high-principles banks reported they were providing, and the customers could rely on.

This paper explains how Code (2003) was designed to allow the banks to hide behind clever, well-disguised and ambiguous words in order to conceal breaches of the Code and bank complaints, and potentially serious indictable offences. Code (2003) was the first of two steps designed by banks to constrain the Code Compliance Monitors from naming and shaming them.

This was an ambitious plan by banks, preferring customers to use courts, rather then their internal dispute resolution practices to resolve disputes. The Code was said to be a contract between banks and customers backed by Code Compliance Monitors to investigate all complaints.

In 2004, the decision to publish and promote Code (2004) with restrictions placed on Compliance Monitors by the bank CEOs constitution was misleading and deceptive. This paper will publish policies designed by ambitious bankers to conceal reckless and dishonest conduct known to a wide group of banking people.

This paper sets out how banks adopted and promoted Code (2004) principles, without referring to the bank CEOs constitution. It notes the cause: wicked practices and lack of regulation, a trademark of banking over the past decade.

WHAT’S THE NAB STORY

National Australia Bank limited

Principle Place of Business

(UB4440) ‚ Level 4

800 Bourke Street

DOCKLANDS VIC 3008

NAB adopted Code (2004) on 31 May 2004 

The National Australia Bank board was restructured in 2004 with events during the previous year being the catalyst for appointing new directors and renewing bad policies. Since then, a total of fifteen new directors have been appointed, whilst the bank renewed its commitment to meeting the highest standards of corporate governance.

The NAB Corporate Social Responsibility Report states directors have responsibility for corporate governance and board members believe governance is a matter of high importance. The directors will ensure NAB operates with a culture of greater honesty and openness, and greater transparency.

The directors of the bank will provide high quality, relevant and credible information that contains a complete picture of its performance that can be trusted. In its Corporate Responsibility Report, the bank makes no mention on how many customers lodged complains, how many were settled and how many complainants alleged code breaches.

The bank directors did not comment on how effectively the Code Compliance Monitors found their Internal Dispute Resolution procedures, nor did they mention the board supporting the bank CEO’s constitution. The directors accepted the CEOs constitution when they adopted Code (2004), and since then allowed the allegedly dishonest arrangement to remain.

The JMA parties referred dual contracting issues to Mr Cameron Clyne, Managing Director, NAB in open letters dated 4 May 2012 and 10 September 2012.

To view the Cameron Clyne 4 May 2012 letter: Click here

View Cameron Clyne10 September 2012 letter: Click here

NAB Directors (1 August 2003 and 11 May 2004):

Graham Kraehe (28 Aug 1997 – 27 Sep 2005)

John Stewart (11 Aug 2003 – 31 Dec 2008)

George Williamson (10 May 2004 – 7 Jun 2012)

John Thorn (16 Oct 2003 until 2012)

Geoffrey Tomlinson (22 Mar 2000 until 2012)

Francis Cicutto (28 Jul 1998 – 1 Feb 2004)

David Allen (19 Nov 1992 – 16 Feb 2004)

Catherine Walter (28 Sep 1995 – 7 May 2004)

Edward Tweddell (26 Mar 1998 – 27 Aug 2004)

Kenneth Moss (23 Aug 2000 – 27 Aug 2004)

Directors following publication of 11 May 2004 Code:

Daniel Gilbert (2 Sep 2004 until 2012)

Paul Rizzo (2 Sep 2004 until 2012)

Robert Elstone (2 Sep 2004 – 5 Jul 2006)

Jillian Segal (7 Sep 2004 until 2012)

Michael Ullmer (7 Oct 2004 – 31 Aug 2011)

Ahmed Fahour (7 Oct 2004 – 20 Feb 2009)

Michael Chaney (6 Dec 2004 until 2012)

Patricia Cross (1 Dec 2005 until 2012)

Thomas McDonald (7 Dec 2005 – 7 Nov 2008)

Cameron Clyne (1 Jan 2009 until 2012)

John Waller (5 Feb 2009 until 2012)

Mark Joiner (12 Mar 2009 until 2012)

Anthony Yuen (1 Mar 2010 until 2012)

Kenneth Henry (1 Nov 2011 until 2012)

Peter Duncan (2 Nov 2011 – 31 Jul 2008)

WHAT’S THE WESTPAC STORY

Principle Place of Business

Westpac Place

Level 20

275 Kent Street

SYDNEY NSW 2000

Westpac adopted Code (2004) on 1 June 2004

The Westpac Bank’s 2004 Annual Report states its approach to corporate governance is to have a set of values that underpin their everyday activities, which ensure transparency, fair dealing and protecting stakeholder interests. The Westpac Board believes good corporate governance needs to be values driven and directors, senior executives and employees have to be aligned to core values of teamwork, integrity and performance.

Westpac operates with a policy of requiring honesty and integrity and respect for the law, and requires the banks practices and behaviours ensure transparency, fair dealing and protection of stakeholders best interests.

By contact, it is the Westpac Group directors overlooked commenting on their prior knowledge of the bank CEOs constitution when adopted the 2004 Code.

The JMA parties referred dual contracting issues to Ms Gail Kelly, Managing Director, Westpac Group in open letters dated 4 May 2012 and 10 September 2012.

To view the Gail Kelly 4 May 2012 letter: Click here

View Gail Kelly 10 September 2012 letter: Click here

Westpac Directors (1 August 2003 and 11 May 2004):

Peter Wilson (31 Oct 2003 until 2012)

Carolyn Hewson (6 Feb 2003 – 30 Jun 2012)

Edward Evans (23 Aug 2002 – 14 Dec 2011)

David Morgan (23 Aug 2002 – 31 Jan 2008)

David Crawford (23 Aug 2002 – 13 Dec 2007)

Leonard Davis (23 Aug 2002 – 31 Mar 2007)

Helen Lynch (23 Aug 2002 – 14 Dec 2006)

Llewellyn Edwards (23 Aug 2002 – 16 Dec 2004)

William Cap (23 Aug 2002 – 12 Dec 2003)

Directors following publication of 11 May 2004 Code:

Gordon Cairns (8 Jul 2004 until 2012)

Elizabeth Bryan (6 Nov 2006 until 2012)

Gail Kelly (1 Feb 2008 until 2012)

Lindsay Maxsted (1 Mar 2008 until 2012)

John Curtis (1 Dec 2008 until 2012)

Peter Hawkins (1 Dec 2008 until 2012)

Graham Reaney (1 Dec 2008 – 14 Dec 2011)

Ann Pickard (1 Feb 2011 until 2012)

Robert Elstone (1 Feb 2012 until 2012)

WHAT’S ST GEORGE BANK STORY

Principle Place of Business

St George Bank House

14 – 16 Montgomery Street

KOGARAH NSW 2217

St George Bank adopted Code (2004) on 1 June 2004 

The St George Bank published a code of ethics setting out expectations of directors and staff in dealings with customers. The bank said it required the highest-standards of integrity and honesty in all dealings, avoidance of conflicts of interest and observance of the law.

On 1 July 2004, when the government’s new corporate governance reforms were published, St George Bank published a statement stating whilst these laws have not yet been applied to the bank, the directors have decided to early-adopt some of the reforms.

The St George Bank directors are responsible for implementing governance policies and overseeing bank controls, systems and procedures to ensure there is compliance with all regulatory and prudential requirements. The directors review all matters of corporate governance and monitor senior managers implementation of strategies, including reporting known or suspected incidences of improper conduct.

The board’s acceptance of the bank CEOs constitution, in place when the St George Bank adopted the 2004 Code, has never been explained. The banks code of ethics appears to constrain conflicting values, yet the code of ethics encourages bank staff (but possibly not its directors) to report, in good faith, suspected unlawful/ unethical behaviour.

The JMA parties referred dual contracting issues to Mr George Frazis, Managing Director, St George in open letters dated 4 May 2012 and 10 September 2012.

To view the George Frazis 4 May 2012 letter: Click here

View George Frazis 10 September 2012 letter: Click here

St George Bank Directors (1 August 2003 and 11 May 2004):

Gail Kelly (29 Jan 2002 – 1 Mar 2010)

Graham Reaney (27 Oct 1996 – 1 Dec 2008)

Paul Isherwood (27 Oct 1997 – 1 Dec 2008)

Linda Nicholls (26 Aug 2002 – 1 Dec 2008)

John Curtis (27 Oct 1997 – 1 Jul 2008)

John Thame (24 Feb 1997 – 1 Jul 2008)

Leonard Bleasel (27 May 1993 – 16 Dec 2005

Frank Conroy (28 Aug 1995 – 17 Dec 2004)

Bank Directors following publication of 11 May 2004 Code:

Richard England (10 Sep 2004 – 1 Dec 2008)

Terry Davis (17 Dec 2004 – 1 Dec 2008)

Roderic Holliday-Smith (27 Feb 2007 – 1 Dec 2008)

Peter Hawkins (24 Apr 2007 – 1 Dec 2008)

Gregory Bartlett (1 Dec 2008 – 1 Mar 2010)

John Curtis (1 Dec 2008 – 1 Mar 2010)

Peter Hawkins (1 Dec 2008 – 1 Mar 2010)

Lindsay Maxsted (1 Dec 2008 – 1 Mar 2010)

Paul Fegan (7 Feb 2008 – 1 Dec 2008)

WHAT’S THE BANK SA STORY

Principle Place of Business

Level 11

97 King William Street

ADELAIDE SA 5000

Bank SA adopted Code (2004) on 1 June 2004 

The St George Bank Limited wholly owns the Bank of South Australia. For the purpose of this paper, the same policies, practices and principles will apply.

JMA parties referred dual contracting issues to Ms Jane Kittel, Managing Director, Bank SA in open letters dated 4 May 2012 and 10 September 2012.

To view the Jane Kittel 4 May 2012 letter: Click here

View Jane Kittell 10 September 2012 letter: Click here

WHAT’S ING BANK (AUST.) STORY

Principle Place of Business

Level 14

140 Sussex Street

SYDNEY NSW 2000

ING Bank adopted Code (2004) on 15 June 2004

The ING Bank directors have responsibility for identifying and ensuring compliance of the banks regulatory and ethical expectations and obligations.

The JMA parties referred dual contacting allegations to Mr Donald Koch, Managing Director, ING Bank (Australia) in open letters dated 4 May 2012 and 10 September 2012.

To view the Donald Koch 4 May 2012 letter: Click here

View Donald Koch 10 September 2012 letter: Click here

ING Bank Directors (1 August 2003 and 11 May 2004):

Phillip Shirriff (1 Jul 1985 – 31 Mar 2011)

Anthony Berg (19 Apr 2000 – 24 Jul 2007)

Hans Verkoren (31 Dec 1994 – 31 May 2006)

Vaughn Richtor (8 Feb 1995 – 27 May 2006)

Geoffrey Brunsdon (19 May 2000 – 26 Jul 2005)

Directors following publication of 11 May 2004 Code:

Eric Robles (19 May 2004 – 20 Mar 2007)

Evert Drok (30 Nov 2005 – 1 Jun 2009)

Irene Lee (23 Dec 2005 – 2 Nov 2011)

Dirk Harryvan (25 Jul 2006 – 1 Jun 2009)

Simonis Tellings (9 Mar 2007 – 1 Oct 2010)

Hugh Harley (24 Jul 2007 – 26 Feb 2010)

Donald Koch (1 Jun 2009 until 2012)

John Masters (1 Jan 2010 until 2012)

Michael Katz (1 Jan 2010 until 2012)

Vaughn Richtor (5 Feb 2010 until 2012)

Brunon Bartkiewicz (1 Oct 2010 – 29 Mar 2012)

Amanda Lacaze (31 May 2011 until 2012)

Ann Sherry (30 Aug 2011 until 2012)

Leenaars Conelis (29 Mar 2012 until 2012)

WHAT’S SUNCORP BANK STORY

Principle Place of Business

Suncorp Centre

Level 18

36 Wickham Terrace

BRISBANE QLD 4000

SML Bank adopted Code (2004) on 30 June 2004

The Suncorp Annual Report 2004 states core values are:

Trust– keeping promises;

Honesty– talking straight, being genuine and ethical;

Courage– taking accountability for results;

Fairness– treating people justly and equitably;

Respect– treating individuals with dignity, and

Caring– listening carefully to others.

Suncorp Bank identified important attributes its directors and executives must have in dealings with customers. These are accountability, independence, diligence, prudence, transparency and most of all integrity.

The JMA parties referred dual contracting issues to Mr Patrick Snowball, Managing Director, Suncorp Metway Bank in open letters dated 4 May 2012 and 10 September 2012.

To view the Patrick Snowball 4 May 2012 letter: Click here

View Patrick Snowball 10 September 2012 letter: Click here

SML Bank Directors (1 August 2003 and 11 May 2004):

William Bartlett (1 Jul 2003)

John Story (24 Jan 1995)

Ian Blackburne (3 Aug 2000)

Cherrell Hirst (8 Feb 2002)

Christopher Skilton (13 Nov 2002)

Martin Kriewaldt (1 Dec 1996)

Directors following publication of 11 May 2004 Code:

Zygmunt Edward (19 Sep 2005 until 2012)

Geoffrey Rickets (20 Mar 2007 until 2012)

Patrick Snowball (1 Sep 2009 until 2012)

Ewoud Kulk (20 Mar 2007 until 2012)

Ilana Atlas (1 Jan 2011 until 2012)

Leo Tutt (20 Mar 2007)

Paula Dwyer (26 Apr 2007)

WHAT’S HSBC BANK STORY

Principle Place of Business

Level 32

HSBC CENTRE

580 George Street

SYDNEY NSW 2000

HSBC adopted Code (2004) on 5 July 2004

In HSBC Supplementary Product Disclosure Statement dated 1 March 2010, with a footnote stating HSBC, the worlds local bank, it states HSBC Bank is committee to delivery of excellence; our aim is to resolve most issues within five working days; if you have a concern about procedure, compliance issues… we want you to tell us.

We have designed a simple customer complaint process; [and] the bank warrants that it will comply with the Code of Banking Practice where those requirements apply to your dealings with the bank.

The JMA parties referred the problematic code issues to Mr Paulo Torre Maia, Managing Director, HSBC Bank in open letters dated 4 May 2012 and 10 September 2012.

To view the Paulo Torre Maia 4 May 2012 letter: Click here

View Paulo Torre Maia 10 September 2012 letter: Click here

HSBC Bank Directors (1 August 2003 and 11 May 2004):

Stuart Davis (8 Mar 2002 – 1 Jul 2009)

Michael Smith (1 Jan 2004 – 15 Jun 2007)

Anthony Hodgson (24 May 2001 – 26 Oct 2005)

David Eldon (2 Feb 1993 – 24 May 2005)

David Say (18 May 1993 – 31 Dec 2004)

Garry McLennan (24 Apr 2001 – 31 Dec 2004)

Aman Mehta (2 Feb 1998 – 31 Dec 2003)

Directors following publication of 11 May 2004 Code:

Graham Bradley (4 June 2004 until 2012)

Vincent Cheng (25 May 2005 – 1 Feb 2010)

Lynette Wood (26 Oct 2005 – 31 Dec 2008)

Richard Humphry (26 Oct 2005 until 2012)

Alexander Flockhart (1 Aug 2007 – 30 Apr 2012)

Kerrie Kelly (1 Jan 2009 – 1 Feb 2010)

Paulo Maia (1 Jul 2009 until 2012)

Carol Austin (1 Feb 2010 until 2012)

Peter Wong (1 Feb 2010 – 1 Feb 2011)

Anthony Cripps (17 Jul 2010 until 2012)

Guy Harvey-Samuel (1 Feb 2011 until 2012)

WHAT’S THE CBA STORY

Principle Place of Business

Ground Floor Tower 1

201 Sussex Street

SYDNEY NSW 2000

CBA adopted Code (2004) on 22 July 2004 

The CBA Annual Report 2004 states the bank demands the highest standards of honesty from bank people. CBA value statement is – trust, honesty and integrity’ which reflects the bank’s high-standards.

The bank adopted a code of ethics known as its Statement of Professional Practice, which sets standards of behaviour required of all bank directors and employees. It requires bank people to avoid situations that may give rise to conflicts of interest, and to ensure they are absolutely honest in all professional activities.

CBA states its standards are regularly communicated to staff to reinforce the need for the highest standards of honesty and loyalty, and its governance principles. The bank is strongly committed to maintaining an ethical workplace, and complying with legal and ethical responsibilities, and reporting instances of fraud, corruption and maladministration.

The JMA parties referred dual contracting issues to Mr Ian Narev, Managing Director, Commonwealth Bank in open letters dated 4 May 2012 and 10 September 2012.

To view the Ian Narev 4 May 2012 letter: Click here

View Ian Narev 10 September 2012 letter: Click here

CBA Directors (1 August 2003 and 11 May 2004):

Fergus Ryan (31 mar 2000 until 2012)

Sarah Kay (5 Mar 2003 until 2012)

Colin Galbraith (13 Jun 2000 until 2012)

Reginald Clairs (1 Mar 1999 – 13 Apr 2010)

John Schubert (9 Oct 1991 – 10 2 2010)

Francis Swan (11 Jul 1997 – 7 Nov 2007)

Warwick Kent (13 Jun 2000 – 7 Nov 2007)

Anthony Daniels (31 Mar 2000 – 3 Nov 2006)

Barbara Ward (14 Sep 1994 – 3 Nov 2006)

David Murray (21 Jun 1992 – 22 Sep 2005)

John Ralph (17 Apr 1991 – 5 Nov 2004)

Norman Alder (17 Apr 1991 – 5 Nov 2004)

Directors following publication of 11 May 2004 Code:

Jane Hemstritch (9 Oct 2006 until 2012)

Harrison Young (13 Feb 2007 until 2012)

John Anderson (12 Mar 2007 until 2012)

Andrew Mohl (1 Jul 2008 until 2012)

Brian Long (1 Sep 2010 until 2012)

Lorna Inman (16 Mar 2011 until 2012)

David Turner (1 Aug 2006 until 2012)

Ian Narev (1 Dec 2011 until 2012)

Ralph Norris (22 Sep 2005 – 30 Nov 2011)

WHAT’S THE ANZ BANK STORY

Principle Place of Business

ANZ Centre Melbourne

Level 9

833 Collins Street

DOCKLANDS VIC 3008

ANZ Bank Adopted the 2004 Code on 16 August 2004 

The ANZ Banks Annual Report 2004 states good corporate governance meets the bank’s ethical and stewardship responsibilities, and provides us with a strong commercial advantage. Its Chairman noted in his report the bank has taken a broader role in the community and reinforces the board’s message that quality disclosure is fundamental to achieving the bank’s vision ‘to become Australia’s leading and most respected major bank’.

The banks report comments on directors and employees overriding responsibility, which is to act honestly, fairly, diligently and progressively, and in accordance with the law.  Its key codes and policies apply to the directors and employees and are expected to pursue the highest standards of ethical conduct, reinforcing the bank’s commitment to having an overriding responsibility to ‘always act honestly, fairly, diligently and progressively’.

The banks directors and employees are expected to adhere to the high standards set out in the bank’s code. These require directors and employees always act honestly and ethically in all dealings. The ANZ Bank aims to achieve a culture encouraging open and honest communication and all levels of accountability, to meet ethical responsibilities.

The JMA parties referred dual contracting issues to Mr Michael Smith, Managing Director, ANZ Bank and recent Chair of the Australian Bankes Association in opens letter dated 4 May 2012 and 10 September 2012.

To view the Michael Smith 4 May 2012 letter : Click here

View Michael Smith 10 September 2012 letter : Click here

ANZ Bank Directors (1 August 2003 and 11 May 2004):

Gregory Clark (1 Feb 2004 until 2012)

Charles Goode (24 Jul 1991 – 28 Feb 2010)

Jeremy Ellis (1 Oct 1995 – 18 Dec 2009)

Margaret Jackson (22 Mar 1994 – 21 Mar 2009)

John McFarlane (1 Oct 1997 – 30 Sep 2007)

David Gonski (7 Feb 2002 – 30 Jun 2007)

Brian Scott (21 Aug 1985 – 23 Apr 2005)

John Dahlsen (20 May 1985 – 3 Feb 2005)

Directors following publication of 11 May 2004 Code:

David Meiklejohn (1 Oct 2004 until 2012)

John Morschel (1 Oct 2004 until 2012)

Michael Smith (1 Oct 2007 until 2012)

Ian MacFarlane (16 Feb 2007 until 2012)

Peter Hay (12 Nov 2008 until 2012)

Alison Watkins (12 Nov 2008 until 2012)

Hsien Yang Lee (1 Feb 2009 until 2012)

WHAT’S THE CITIBANK STORY

Principle Place of Business

Citigroup Centre

2 Park Street

SYDNEY NSW 2000

Citibank adopted Code (2004) on 14 October 2004

Citibank in on record as saying it does not investigate issues relating to constitutional aspects of the Code Compliance Monitoring Committee and the ABA is responsible for publishing the Code of Banking Conduct. As such, Citibank does not investigate issues not relating to financial services.

A letter written on behalf of Citibank directors state clause 35 of the code requires the bank to have an Internal Dispute Resolution process to deal with ‘disputes‘ and a dispute [only] relates to any complaint by a customer in relation to a banking service (Citibank’s emphasis added).

The JMA parties referred dual contracting issues to Mr Stephen Roberts, Managing Director, Citibank in open letters dated 4 May 2012 and 10 September 2012.

To view the Stephen Roberts 4 May 2012 letter: Click here

View Stephen Roberts 10 September 2012 letter: Click here

Citi Group Directors (1 August 2003 and 11 May 2004):

Stephen Roberts (29 May 2003 until 2012)

Steven Baker (29 Nov 1984 – 13 Feb 1986)

Richard Jackson (29 Nov 1984 until 2012)

Francis Catterson (6 Feb 1984 until 2012)

Michael Cannon-Brookes (28 Feb 1991)

Ronald Bunker (13 Nov 1998 – 29 Sep 2010)

Norman Craig (12 Jan 1995 – 29 May 2008)

Leslie Matheson (1 Feb 2002 – 7 Apr 2008)

Willard Scott (31 May 2002 – 19 Nov 2007)

Directors following publication of 11 May 2004 Code:

Richard Warburton (23 Mar 2005 until 2012)

Barry Brownjohn (1 Mar 2006 until 2012)

Francis Ford (19 Mar 2008 until 2012)

Roy Gori (7 Apr 2008 until 2012)

Nicholas Greiner (29 Jul 2008 – 27 May 2011)

George Trowse (17 Mar 2011 until 2012)

Samantha Mostyn (19 Jul 20011 until 2012)

David Mouille (26 Jul 2011 until 2012)

WHAT’S BANK OF QUEENSLAND STORY

Principle Place of Business

Level 17

259 Queens Street

BRISBANE QLD 4000

BOQ adopted Code (2004) on 6 December 2004

Bank of Queensland has its own code of conduct setting out principles directors, employees, owner-managers and contractors are expected to uphold. It actively promotes ethical and responsible decision-making in the bank and requires employees to undergo training in various areas of bank policy, including the Code of Banking Practice.

The JMA parties referred dual contracting issues to Mr Stuart Grimshaw, Managing Director, Bank of Queensland in open letters dated 4 May 2012 and 10 September 2012.

To view the Stuart Grimshaw 4 May 2012 letter: Click here

View Stuart Grimshaw 10 September 2012 letter: Click here

Bank of Queensland Directors (1 August 2003 and 11 May 2004):

Neil Summerson (5 Dec 1996 until 2012)

Antony James Love (16 Jun 1995 – 11 Dec 2008)

Neil Roberts (26 Nov 1987 – 20 Aug 2008)

Bruce Phillips (30 Nov 1996 – 12 Oct 2006)

Peter Fox (18 May 2001- 25 Nov 2011))

John Kelty (31 Aug 2001 – 31 Jul 2012))

David Liddy (9 Apr 2001 – 31 Aug 2011)

John Reynolds (4 Apr 2003 until 2012)

Directors following publication of 11 May 2004 Code:

Carmel Gray (6 Apr 2006 until 2012)

David Graham (12 Oct 2006 – 8 Oct 2010)

Anthony Howarth (18 Dec 2007 – 26 Jul 2010)

Roger Davis (28 Aug 2008 until 2012)

Steven Crane (11 Dec 2008 until 2012)

 Michelle Tredenick (22 Feb 2011 until 2012)

Stuart Ian Grimshaw (1 Nov 2012 until 2012)

Richard George Haire (18 April 2012)

WHAT’S THE BANKWEST STORY

Principle Place of Business

300 Murray Street

PERTH WA 6000

BWA adopted Code (2004) on 1 April 2005

Bankwest set out its position with respect to the Code of Banking Practice stating it sets standards for good banking practice. It’s the banks commitment to customers on standards of practice, disclosure and principles of conduct. We subscribe to the code including modifications.

Until recently the directors of Bankwest were happy to be quoted as saying the code was a contract, but recently it changed its position. However, the bank does hold, we believe, the code represents a distillation of fair and prudent banking practices and compliance with it is in the interest of banks and customers.

The JMA parties referred dual contracting issues to Mr Rob De Luca, Managing Director, Bankwest in open letters dated 4 May 2012 and 10 September 2012.

To view the Rob De Luca 4 May 2012 letter: Click here

View Rob De Luca 10 September 2012 letter: Click here

Bankwest Directors (1 August 2003 and 11 May 2004):

Ian MacKenzie (15 Dec 1994 – 5 Feb 2010)

Colin Matthew (23 Oct 2003 – 19 Dec 2008)

Daniel McArthur (21 Jun 2002 – 14 Dec 2007)

John MacLean (25 Mar 2004 – 28 Jun 2007)

Leigh Warnick (1 Apr 1993 – 15 Dec 2005)

Michael O’Leary (3 May 1996 – 23 Sep 2004)

Ronald Turner (18 Dec 1990 – 23 Sep 2004)

Richard Turner (24 Oct 2002 – 23 Sep 2004)

Robyn Ahern (1 May 1996 – 23 Sep 2004)

Terence Budge (30 Nov 1997 – 12 May 2004)

Thomas Abraham (29 Mar 2001 – 24 Mar 2004)

Alastair Loudon (31 Aug 2000 – 24 Oct 2003)

Directors following publication of 11 May 2004 Code:

David Willis (5 Aug 2004 – 15 Dec 2005)

Susan Wilson (15 Dec 2005 – 13 May 2009)

Richard Turner (15 Dec 2005 – 19 Dec 2008)

Christopher Whitehead (15 Dec 2005 – 13 Dec 2006)

Simon Walsh (13 Dec 2006 – 19 Dec 2008)

Brian Jamieson (28 Jun 2007 – 30 Mar 2011)

Ian Corfield (14 Dec 2007 – 15 Apr 2008)

Ross Moulton (15 Apr 2008 -19 Dec 2008)

Jennifer Seabrook (19 Dec 2008 until 2012)

Garry Mackrell (19 Dec 2008 until 2012)

Jon Sutton (19 Dec 2008 – 28 Mar 2011)

Harvey Collins (13 May 2009 until 2012)

Robert McKinnon (13 May 2009 until 2012)

Simon Blair (18 Aug 2009 until 2012)

Roberto Deluca (28 Mar 2012)

WHAT’S BENDIGO & ADELAIDE BANK STORY

Principle Place of Business

The Bendigo Centre

BENDIGO VIC 3550

Adelaide Bank adopted Code (2004) on 4 April 2005

Adelaide Bank has a code setting out standards each manager, executive and employee is required to meet. Its code is said to enforce principles in the Code of Banking Practice and obliges employees to contribute to the wellbeing of the community and to demonstrate social responsibility and honesty in dealings with others.

Adelaide bank has a corporate governance charter. It states the bank is committed to the highest standards of governance and best practice. The practices described in the corporate governance schedule are the responsibility of directors; the directors have adopted the Code of Banking Practice, which reflects the banks attitude to expected behaviour.

Bendigo Bank Adopted the 2004 Code on 1 July 2005

Bendigo Bank’s policy states if an employee acts fraudulently, dishonestly or breaches legal duties, any unvested bank options or performance rights lapse.

The bank believes customer service and community relevance remain its longest standing competitive advantages. Thus, the bank needs to continue to invest in the people and technology needed to maintain its standards.

Adelaide bank’s corporate governance charter would, in all likelihood, remain in once eth banks merged.

The JMA parties referred dual contacting issues to Mr Michael Hirst, Managing Director, Bendigo and Adelaide Bank in open letters dated 4 May 2012 and 10 September 2012.

To view the Michael Hirst 4 May 2012 letter: Click here

View Michael Hirst 10 September 2012 letter: Click here

Bendigo and Adelaide Directors (1 August 2003 and 11 May 2004):

Robert Johanson (1 Jul 1995)

Jennifer Dawson (27 Aug 1999)

Terence O’Dwyer (23 Oct 2000)

Kevin Roache (1 Jul 1995 – 26 Oct 2009)

Robert Hunt (1 Jul 1995 – 3 Jul 2009)

Donald Erskine (27 Aug 1999 – 31 Nov 2007)

Neal Axelby (23 Oct 2000 – 31 Nov 2007)

Richard Guy (1 Jul 1995 – 31 Aug 2006)

Directors following publication of 11 May 2004 Code:

Antony Robinson (24 Apr 2006 until 29012)

Deborah Radford (27 Feb 2006 until 29012)

Kevin Abrahamson (30 Nov 2007 – 24 Nov 2011)

James McPhee (30 Nov 2007 – 27 Jan 2010)

Kevin Osborn (30 Nov 2007 – 3 Dec 2009)

Adele Lloyd (30 Nov 2007 – 23 Jun 2008)

Roger Cook (30 Nov 2007 – 17 Dec 2007)

Michael Hirst (3 Jul 2009 until 29012)

James Hazel (1 Mar 2010 until 29012)

David Matthews (1 Mar 2010 until 29012)

Jacqueline Hey (5 Jul 2011 until 29012)

WHAT’S THE RABOBANK STORY

Principle Place of Business

Darling Park Tower 3

Level 16

201 Sussex Street

SYDNEY NSW 2000

Rabobank adopted Code (2004) on 22 September 2008

Rabobank is reported to have over 9 million customers worldwide in 48 countries.

It encourages innovations and provides products and services that contribute to the sustainable development of the wealth and prosperity of its clients.

Having adopted the Code of Banking Practice, Rabobank made a statement that it is committed to working towards improving the standards of practice in the banking industry. It states in its code publication notes that the Code governs the behaviour of banks, encouraging fair and ethical behavior, and has appropriate dispute resolution practices.

The JMA parties referred dual contracting issues to Mr Theodorus Gieskes, Managing Director, Rabobank Australia in open letters dated 4 May 2012 and 10 September 2012.

To view the Theodorus Gieskes 4 May 2012 letter: Click here

View Theodorus Gieskes 10 September 2012 letter: Click here

Rabobank Directors Since it Adopted Code 22 September 2008;

David Smithers (17 Sep 2003 until 2012)

John Palmer (30 Nov 2004 until 2012)

William Gurry (18 Mar 2005 until 2012)

Jan Pruijs (26 Nov 2010 until 2012)

Bernardus Martin (26 Nov 2010 until 2012)

Theodorus Gieskes (1 Nov 2009 until 2012)

Anne Brennan (28 Nov 2011 until 2012)

Henry Van Der Heyden (23 Mar 2012 until 2012)

WHAT’S THE AMP BANK STORY

Principle Place of Business

Jessie Street Centre

2 – 12 Macquarie Street

SYDNEY NSW 2000

AMP Bank Adopted Code (2004) on 10 December 2010

The AMP directors adopted the Code of Banking Practice in December 2010 however the banks Managing Director, Michael John Lawrence was appointed a director of the ABA in 2008. The conduct of the AMP Bank would therefore reflect acceptance of the ABA policies.

AMP Banks corporate ambitions in the banking sector can be viewed by referring to the banks corporate governance reports. To this end, AMP asserts superior leadership exists where transparent accountable behaviour is consistently demonstrated; flashing light appear when companies lack transparency.

In the AMP Compliance Essentials paper, the bank requires its associates to comply with the Corporations Act and Trade Practices Act. It states AMP Bank expects its associates to comply with the Code of Banking Practice that describes standards of good practice and ensure banks have procedures for resolution of disputes between banks and customers.

The JMA parties referred dual contracting issues to Mr Michael Lawrence, Managing Director, AMP in open letters dated 4 May 2012 and 10 September 2012.

To view the Michael Lawrence 4 May 2012 letter: Click here

View Michael Lawrence 10 September 2012 letter: Click here

AMP Bank Directors Since it Adopted the Code 10 December 2010

Neville Cox (24 June 2003 until 2012)

David Morris (24 June 2003 until 2012)

Craig Duncan Meller (2 Apr 2002 until 2012)

Michael John Lawrence (21 Dec 2007 until 2012)

Nora Lia Scheinkestel (24 Apr 2009 until 2012)

Colin Grahame Storrie (14 Apr 2011 until 2012)

Patricia Akopiantz (23 Nov 2011 until 2012)

Paul Anthony Fegan (1 Apr 2010 until 2012)

WHAT’S BANK OF MELBOURNE STORY

Principle Place of Business

314 Whitehorse Road

BALWYN VIC 3103

Bank of Melbourne adopted Code (2004) on 25 January 2011

Bank of Melbourne Directors details and values in 2004 can be viewed by referring to the Westpac Banking Group section in the paper, as it is a division of WBC. Its policy regarding the policies of the bank and officers regarding compliance with the Code of Banking Practice, Corporations law and Trade Practices Act would reflect the values of the parent bank.

The JMA parties referred dual contracting issues to Mr Scott Tanner, Chief Executive Officer, Bank of Melbourne in open letters dated 4 May 2012 and 10 September 2012.

To view the Scott Tanner 4 May 2012 letter: Click here

View Scott Tanner 10 September 2012 letter: Click here

Bank of Melbourne officers since it adopted Code (2004)

Scott Tanner (Chief Executive – 2012)

Elizabeth Proust AO (Advisory Board Chairman – 2012)

Carol Schwartz AM (Advisory Board – 2012)

Peter Hawkins (Advisory Board – 2012)

WHAT’S BEIRUT HELLENIC BANK STORY

Principle Place of Business

Level 4

219 – 223 Castlereagh Street

SYDNEY NSW 2000

Beirut Hellenic Bank adopted Code (2004) on 1 January 2012 

Beirut Hellenic Directors and their values in 2004 are not relevant as the bank only adopted the Code when this paper was published.

The JMA parties referred dual contracting issues to Mr James Wakim, Managing Director, Beirut Hellenic Bank in open letters dated 4 May 2012 and 10 September 2012.

To view the James Wakim 4 May 2012 letter: Click here

View James Wakim 10 September 2012 letter: Click here

Beirut Hellenic Directors Since it Adopted Code 1 January 2012

Gregory Gav (31 Mar 2005 until 2012)

Nicholas Pappas (26 Mar 2001 until 2012)

James Wakim (28 Feb 2011 until 2012)

Stephen Bracks (18 May 2011 until 2012)

Nikolas Hatzistergos (28 Aug 2006 until 2012)

Promises, and More Promises

As mentioned, directors of the code subscribing banks, through the Australian Bankers Association made promises to implement reforms to benefit customers. At the same time, the Federal Government stepped up its efforts to introduce regulations and reforms to achieve the same end.

In response, the Australian Bankers Association stated bank directors are pleased the Federal Government was looking for ways to reduce red tape for banks and customers while maintaining the important consumer protections.’

The Managing Director, ABA repeated bank support:

We note and support government’s view that there needs to be greater consultation by the regulators within the industry. The ABA supports… recommendations regulators should develop a wider range of performance indicators for annual reporting.’

A milestone in achieving the government’s stated aims would be to apply the Martin Committee’s principles and remove the bank CEOs constitution, introduce proscribed Codes and require banks to honestly and truthfully investigate all complaints.

There must be truth in banking and if any bank directors have acted dishonestly, they should tale a lesson from the National Australia Bank’s archives, 2004.

Senate Committee Report webpage (Sub No. 90): Click Here…