The Unpleasant Truth About Australian Banking

The architects of the Code of Banking Practice were members of the Martin Committee. During the infancy of self-regulation in the banking and financial sector, the government relied on advice from several advisory bodies, which included bankers.

Whilst it’s unlikely all government advisers would have been privy to the later inefficacy and shortcomings of bank/ customer contracts, the bankers in each group were. Some were also members of the bank CEOs association. All knew there were competing bank agreements, created to limit the independence, powers and authority of the Code Monitors and to lessen the rights of individual and small business customers.

Financial Sector Advisory Council

The Financial Sector Advisory Council was a non-statutory body established in 1998 to provide advice to the Government on policies intended to maintain an efficient, competitive and dynamic financial sector, with overarching objectives including fairness. The Financial Advisory Council members were skilled and experienced business professionals drawn from the banking and finance sector. As experts in the area of banking and finance, the government would have it difficult to find people with more experience, however some had dubious backgrounds.

The Council still reports to the Treasurer.

Financial Sector Advisory Council Members (2000), were:

Maurice Newman (Chairman) – Deutsche Bank and ASX (appointed 1998) (re-appointed 2000)

Paul Batchelor – AMP Limited (appointed November 1999)

Terry Budge – Bank of Western Australia (appointed March 1998)

Patricia Cross – Suncorp – Metway Limited (appointed March 1998)

Les Hosking – Australian Centre for Global Finance (appointed March 1998)

Ian MacFarlane – Governor of the RBA (appointed August 1999 until 2002)

David Murray – Commonwealth Bank of Australia (appointed August 1999)

Richard Sheppard – Macquarie Bank Limited (appointed March 1998)

John Trowbridge – Trowbridge Consulting Pty Limited (appointed 1998)

Charles Curran AO – QBE Insurance Group (appointed 22 August 2002)

Chris Mackay – UBS Warburg (appointed 22 August 2002)

David Murray, CBA, Chief Executive, was later Chairman, ABA and member of the bank CEOs association. He was aware of dual contracting by code subscribing banks since 20 February 2004.

Financial Sector Advisory Council Members (2005), were:

Maurice Newman AC (Chairman) – Deutsche Bank and ASX

Charles Curran AO – QBE Insurance Group

Jeremy Duffield – Managing Director, Vanguard Investments

Barry Fitzgerald – CEO, Adelaide Bank

Michael Hawker – CEO, Insurance Australia Group

Chris Mackay – CEO, UBS Australia

Gail Kelly – Managing Director, St George Bank

Linda Nicholls, Director, St George Bank

Les Owen – CEO, AXA Asia Pacific Holdings

Richard Shepard – Deputy Managing Director, Macquarie Bank

Alastair Walton – Vice Chair, Goldman Sachs JB Were

Gail Kelly, Managing Director, St George Bank, Deputy Chair, ABA and member of the bank CEOs association and Lind Nichols, Director, St Georg Bank. They were aware of dual contracting by banks since 20 February 2004.

Consumer Affairs Advisory Council

The Consumer Affairs Advisory Council was created to provide advice to the Minister for Financial Services and Regulation on consumer needs arising from market transactions and developments, and at the same time identify emerging issues affecting consumers.

The Consumer Advisory Council continues today and reports to Senator the Hon Ian Campbell, Parliamentary Secretary to the Treasurer and Manager of Government Business in the Senate, who has portfolio responsibility for consumer affairs.

In establishing the Consumer Advisory Council, the Minister for Financial Services and Regulation, Joe Hockey confirmed he was ‘confident the Advisory Council will be a significant consumer voice.

It is important for the government to have direct access to independent grass roots advice from people involved with consumer issues. The purpose of the Consumer Advisory Council is to be part of a framework so consumers are empowered and can make more informed choices.

Consumer Affairs Advisory Council Member (1999)

Colin Neave (Chair) – Financial Ombudsman Service

Gregory Bartels

Caroline De Mori

Janet Grieve

Fiona Guthrie

Emmanuel Hegarthy

Michael Kay

May Miler-Dawkins

Louise Sylvan – CEO Australian Consumers’ Association

Adriana Taylor

The Consumer Affairs Advisory Council was created under the following terms of reference:

    • investigate and report to the Minister on consumer issues referred to the body by the Minister; and
    • advise the Minister on consumer education matters referred to the body by the Minister; and

consider reports and papers referred to the body by the Minister and report on     their likely consumer impact; and

    • identify emerging issues impacting on consumers and draw those to the attention of the Minister.

Colin Neave, Chair, FOS, was aware of the governments Consumer Affairs Councils objectives when his office later appointed the Code Compliance Monitors. This meant he should have known the bank CEOs constitution, drafted on 20 February 2004, was inconsistent with the Advisory Councils objectives.

Self-Regulation Tasks Force

The Minister for Financial Services and Regulation, Joe Hockey responded to the Wallis Inquiry’s recommendations by creating a uniform prudential environment. He believed this would lead to greater certainty for bank customers.

These changes were part of the government’s goal of increasing competition and improving efficiency, while preserving integrity, security and fairness of the financial system Hockey strongly advocated for self-regulation in these words:

I have a great belief in allowing industry to regulate itself. However, where industry is unable to maintain appropriate standards through self-regulatory means and when there is severe market failure, I will look to prescribe industry Codes to make lack of compliance illegal and subject to enforcement under the Trade Practices Act.

In 1999, Minister Joe Hockey created the Self-Regulation Task Force. Its purpose was to provide feedback to government, industry and consumers on what constitutes best practice in industry self-regulation. The Task Force’s aim was to determine best ways to reduce regulatory burden on businesses, identify best practice in self-regulation and ultimately improve market outcomes for consumers.

Self-Regulation Task Force Members: (1999)

Berna Collier (Chair) – Clayton Utz

Peter Daly – Insurance Enquiries and Complaints Ltd

Louise Sylvan – Australian Consumers Association

Mark Paterson – ACCI

Johanna Plante – Australian Communications Industry Forum

Ella Keenan – Business and Professional Women of Australia

Rob Edwards – Australian Direct Marketing Association

Marina Santini Darling – GIO Australia Holdings Ltd

Gary Potts – Treasury

The principles of self-regulation that were established as a result of the Task Force’s investigations, and outcomes that led to banking and finance industry’s standards today will be discussed in later chapters.

Trade Practices Act Review Committee

In 2002, the Treasurer announced the review of competition provisions of the Trade Practices Act. The committee’s task was to determine whether the Trade Practices Act provided sufficient recognition for globalisation factors and for Australian companies to compete globally.

TPA Committee Members were:

Sir Daryl Dawson (Chairman)

Jillian Segal, former Deputy Chair, ASIC (current NAB Director)

Curt Rendall, representing small business

Jillian Segal was a former Deputy Chair, ASIC and is presently a National Australia Bank director.  Having experienced governance failures in 2004, the NAB directors apparently ignored the 2004 events when the bank CEOs constitution was produced that year.

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

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