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Both the Banking Code of Practice and the ePayments Code currently operate…

- - - - However, the FSI suggested that self-regulation could play an important role in some areas, including as a mechanism for facilitating innovative and improved disclosure (particularly disclosure of risks and fees),P845F 79 P improved guidance and disclosure for general insurance,P846F 80 P and for raising industry standards generally. P847F 8
        
        Areas which are still relevant gap fillers
        
        Providing Consumer Rights in Areas Not Covered by Legislation
        
        First, the Banking Code covers important policy issues that are not addressed by legislation, and/or where legislation is unlikely to play a role.
        
        For example, the 2013 Code includes rules on when banks can combine accounts,P897F 131 P the circumstances in which banks will accept customers as co-debtors,P89F 132 P and liability for subsidiary cardsP89F 133 P that are not provided elsewhere in the legislative framework.
        
        Another area in which legislation does not play a role is in relation to various agreements, arrangements and guidelines that affect, or have the potential to affect, the banker–customer relationship, but where customers are not able to directly enforce the document and/or where the document is not easily accessible to customers. The role of the Banking Code here is to increase the enforceability and visibility of these agreements and arrangements for consumers and small businesses, and provide a direct avenue for complaint in the event that the relevant Code provisions are not complied with.
        
        Covering the Gaps in Applicability of Legislative Rules
        
        Secondly, on some policy issues, the Banking Code compensates (at least in part) for gaps in the applicability of legislative rules, and thus provides some protection in relation to a particular policy area for customer groups and/or products to whom the legislative protection does not extend. This role is particularly important for small business customers accessing finance, as the protections in the NCCPA and NCC apply only when the debtor is a natural person (or strata corporation),
    - - The Banking Code provisions therefore build on the legislative obligation, and the relationship between the Banking Code provisions and the legislation might be described as a regulatory dance, with first one, then the other, leading the dance. Recently, the banks have gone even further, supplementing the Banking Code provisions with additional initiatives to support customers in financial difficulty, including an industry guideline on financial difficulty, a commitment to visible disclosure in branches and websites about the availability of hardship assistance, standardised forms for use by financial counsellors in representing customers, and a commitment to a minimum standard of training about bank hardship
  - - - Flexible
        
        Self-regulation is a viable option if it can improve market outcomes with direct reference to lowering costs to industry participants and providing benefits to both businesses and consumers. Self-regulatory schemes tend to promote good practice and target specific problems within industries, impose lower compliance costs on business, and offer quick, low cost dispute resolution procedures. Effective self-regulation can also avoid the often overly prescriptive nature of regulation and allow industry the flexibility to provide greater choice for consumers and to be more responsive to changing consumer expectations. ( Final report)
        
        However, self-regulation can be cheaper (in terms of compliance costs) and more flexible than government regulation and the court system. Ultimately, the consumer bears the cost of regulation in most cases, as it is part of a firm’s cost structure.
        
        Self-regulation is often considered to be a flexible, responsive and efficient form of regulation. Self-regulation, by definition, utilises direct industry experience and provides tailor-made solutions. Because of the speed with which it can be implemented and the degree of ownership of rules b
        40 C HAPTER 3 participants, self-regulation is likely to be relatively effective in addressing the need for rapid cultural change within organisations and industries. ( Grey letters)
- - - - Going forward will, continue to be relevant? / the best way to achieve complaince in the banking sector
  - - - To help have this confidence, we need strong and enforceable regulations, but unfortunately that is not what we have right now, in particular when it comes to the current Code of Banking Practice, which is, quite frankly, a toothless tiger that is badly letting down Australian households and small businesses. What is my evidence for this? Quite simply, the fact that tens of thousands of complaints are made to the banks each year and a disproportionate number of them are resolved in favour of the banks or are never resolved at all. (Wilkie speech)
        
        Since 2004, for example, there have been something like 2.5 million complaints against Australian banks, and how many do you think have been fully investigated to the extent of the current code?
        
        The system is not just broken; rather, it is badly designed. It does not work and it will never work properly because the current code of practice is voluntary and has been set up by the banks. It is run by the banks and is overseen by the banks. No wonder it is so easy to guess in advance who is going to come out on top and who is going to lose when you have individuals and small businesses with disputes up against the giant banks with their seemingly unlimited resources
        
        banks. To that end the private member's bill I have introduced today will establish a new and mandatory code, to be known as 'the banking code of conduct', and will give the Australian Prudential Regulation Authority the power to name and shame and even fine any bank or banks failing to comply with it.
- - - - The Banking Code is published by the ABA and it applies to consumer and small business customers and their guarantors, and, where relevant, to potential consumer and small business customers and guarantors.P817F 51 P It applies to all of a subscribing bank’s ‘banking services’, including services supplied through an intermediary.P81F 52 P
        
        In contrast to some other financial services codes,P819F 53 P compliance with the Banking Code is incorporated into the terms and conditions of banking products, thus becoming part of the contract between a customer and a subscribing bank.P820F 54 P Non-compliance with the Banking Code may then amount to a breach of contract, which could be pursued through the court system.
        
        Both Australia Bank Ltd v Rose [2016] VSCA 169 & Doggett which preceded it confirm that the provisions of the Code can and do have contractual effect as between a bank and its customers. It demonstrates the importance of strict adherence to the Code and the consequences which can follow if those requirements are not observed.
        
        Compliance with the Banking Code is monitored by the independent Code Compliance Monitoring Committee (‘CCMC’) now the BCCC which consists of an Independent Chairperson, a consumer and small business representative, and an industry representative.P82F 56 P The CCMC’s functions include investigating and determining allegations of non-compliance and monitoring compliance with the Banking Code, including by conducting own motion inquiries.P823F 57 P
        
        n certain circumstances, the CCMC is empowered to name a bank for non-compliance,P824F 58 P but the CCMC has no powers to award compensation or redress to a customer if it has been found that the Banking Code has been breached. In contrast, the Financial Ombudsman Service (‘FOS’)P825F 59 P can award compensation or other redress to bank customers.P826F 60 P However, the role of FOS is to resolve particular disputes, and most disputes are resolved without FOS needing to make a decision setting out its views on the matter.P827F 61
        
        Our Charter empowers us to investigate allegations of Code breaches as well as potential Code breaches identified through our monitoring activities. Our investigations examine whether a bank has complied with its Code obligations and if it needs to change its policies or processes
        
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    - - As a consequence, gaps and overlaps can emerge in the coverage of various products, services, sectors and industries. For example, a specific problem may emerge from the use of new technology in an industry and may not be covered by any form of regulation. Self-regulation is one means to overcome any specific problems associated with the new technology. Similarly, some self-regulatory schemes may have a degree of overlap where the distinction between products or services has become blurred
        
        A ‘gap’ in the market does not necessarily mean that self-regulation is the appropriate solution;
    - - Unlike voluntary initiatives, self-regulation is primarily based on compliance with regulations or a set of standards that addresses a perceived gap in regulation. Self-regulation is identified by scholars as “alternate compliance plans conceived by regulated entities, with some degree of government review and involvement” (Steinzor 1998). It enables industry to propose alternative ways to comply with regulations by using different means to achieve environmental goals. Self-regulation programs can also be industry codes of conduct that are sponsored by trade associations designed to improve members’ environmental performance. [book al ianuzzi]
      - the concept itself lacks definitional clarity. In practice, there are many different forms of self-regulatory arrangements and institutions, depending on the specific context in which they evolve.33 { Rethinking self reg]
        
        Thus, self-regulation is often used interchangeably with terms, such as "self-governance," "collaborative governance," "negotiated governance," "co-regulation," "voluntarism," "private regulation," "soft law," "quasi-regulation," "enforced self-regulation," "communitarian regulation," and so on. Each of these terms places the emphasis on a particular characteristic that arguably distinguishes true "self-regulation" from direct government regulation: the purely voluntary nature of regulation, the concentration of rule-making authority solely in the hands of non-governmental actors, or the non-binding or non-legal nature of the rules themselves.34
        
        Many of these concepts attempt to overcome the one-sidedness of the traditional dichotomy between regulation and self-regulation and introduce various hybrid solutions combining self-regulatory mechanisms with some degree of government involvement or oversight. These more sophisticated accounts view "command and control" and self-regulation as extreme points on a single regulatory continuum, with the majority of real-life regulatory regimes falling somewhere between them. 35
      - Alternatives to the model of self regulation that we have
        
        To that end the private member's bill I have introduced today will establish a new and mandatory code, to be known as 'the banking code of conduct', and will give the Australian Prudential Regulation Authority the power to name and shame and even fine any bank or banks failing to comply with it.
        
        Banking Amendment (Banking Code of Conduct) Bill 2012
        
        Evaluate the bill
        
        Does the current system have utility or should it just be legislated?
      - Self regulation vs traditional command and control methods
        
        By creating rules on responsibility for losses, the Code is directed to increasing consumer confidence in electronic payments, leading to their mainstream adoption. The chair of the Australian Bankers Association observed, "Our ambition should be to maximize intelligent self-regulation and minimize government regulation... to demonstrate through our behavior that, wherever it is practicable, self-regulation is better than government regulation."
        
        Self- or co-regulation shifts some risks of regulation from regulatory agencies to industry. This process of industry responsibilisation engages the reputation of the whole industry by industry bodies making their own rules for self-regulation and through industry-based resolution of complaints or disputes with consumers.P78F 22Gail Pearson, Financial Services Law and Compliance in Australia (Cambridge University Press, 2009) 15.
        
        This code administration body should be responsible for gaining adequate funding; monitoring and publishing the results of compliance with the code; hearing complaints and imposing sanctions; reporting systemic breaches t
        
        DOES IT ALL COME DOWN TO THE EFFECTIVENESS OF THE COMPLAINTS SYSTEM?
        
        ASIC pointed to two arrangements as examples of how a code may be enforceable. First, where there is a contractual agreement between subscribers and the central body that is given the power to enforce the code and its standards, as with the General Insurance Code of Practice. Second, where the code subscribers declare their agreement to abide by the code (and thus when they enter into individual contracts with consumers to whom services are provided) they are contractually bound to abide by the standards of the code. Consumers can enforce those standards, particularly when the code provides dispute resolution procedures.
        
        It all comes down to the manner in which voluntary codes attempt to enfroce compliance. A model of compliance based upon forstering persuation
        
        Compliance focuses on target populations of regulation, the extent to which they comply with regulation and why they do so13. The Organisation for Economic Co-operation and Development (OECD)14 refers to Friedrichs (1995) in distinguishing “compliance”, which uses persuasion and co-operation, from “deterrence”, which involves prosecution and punishment. This is sometimes conceptualised through a “compliance pyramid”, which has “self regulation and co-operation” at its base, moving upwards through “assisted self regulation” to “active enforcement” at its apex. Alternatively, the distinction may be depicted as a “regulatory spectrum” on a horizontal scale with deterrence and compliance at opposite ends of the spectrum. Gainsford
        
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        The fundamental difference between quasi-regulation of this sort and strict regulation is that, instead of requiring compliance in legislation, the Government uses a variety of alternative means to achieve compliance ( Grey report)
        
        Sanctions for non-compliance can assist in enhancing the credibility, and thus the degree of public and government confidence, in a scheme — essential pre-requisites for effectiveness.
        
        Sanctions for breaches of industry codes should be flexible enough to reflect the nature and seriousness of the breach of a code and the damage suffered by the complainant — for example, censures, warnings, corrective letters, publicity, corrective advertising, withdrawal of advertisements, fines, suspension or expulsion. The body responsible for the administration of an industry code will need to establish procedures to identify serious or repeated breaches, to hear the case against the member concerned, and to decide on an appropriate penalty. In cases where there may be serious repercussions on a code member subject to a sanction, an appeal mechanism should be in place, not only for equity reasons but also because it might reduce recourse to the courts.
        
        The
        FSI
        Final
        Report
        envisages
        an
        ideal
        system
        as
        one
        that
        manages
        financial
        and
        systemic
        risk
        that
        is
        balanced
        with
        financial
        regulation
        that
        takes
        into
        account
        the
        regulatory
        impact
        on
        costs
        and
        flexibility
        and
        innovation
        within
        the
        regulated
        industry.39
        It
        advises
        policy-‐makers
        to
        achieve
        this
        through
        promotion
        of
        a
        competitive
        and
        stable
        financial
        system
        that
        contributes
        to
        Australia’s
        productivity
        and
        growth
        whilst
        meeting
        the
        needs
        of
        users
        with
        appropriate
        financial
        products
        and
        services;
        and
        by
        the
        creation
        of
        a
        regulatory
        environment
        conducive
        to
        an
        expanding
        body
        of
        dynamic
        and
        innovative
        financial
        service
        providers.40
    - - What is the epayment code
        
        The ePayments Code (this Code) regulates electronic payments, including ATM, EFTPOS and credit card transactions, online payments, internet and mobile banking, and BPAY. This Code (formerly known as the Electronic Funds Transfer Code of Conduct) has existed since 1986. ASIC is responsible for the administration of this Code, including reviewing it regularly. The most recent review was completed in June 2022 [https://download.asic.gov.au/media/lloeicwb/epayments-code-published-02-june-2022.pdf]
        
        This Code plays an important role in the regulation of electronic payment facilities in Australia. It complements other regulatory requirements, including financial services and consumer credit licensing, advice, training and disclosure obligations under the Corporations Act 2001 and the National Consumer Credit Protection Act 2009.
        
        requires subscribers to give consumers terms and conditions, information about changes to
        
        terms and conditions (such as fee increases), receipts and statements,
        
        › sets out the rules for determining who pays for unauthorised transactions, and
        
        › establishes a regime for recovering mistaken internet payments.
      - Effectiveness
        
        In 2019, the Council of Financial Regulators (CFR) recommended that ASIC be given the power to make compliance with the Code mandatory, such as through a legislative rule-making power. In November 2020, The Assistant Minister for Superannuation, Financial Services and Financial Technology issued a media release stating she had asked Treasury to work with APRA and ASIC to develop the reform package to implement the CFR’s recommendations.
        
        The ePayments Code provides some consumer protections; however, it is not mandatory and as such does not cover all consumers.44 The application of the AFSL regime is complex and costly. ASIC has given multiple class orders and individual exemptions because the breadth of current regulation captures entities that should not need an AFSL.45 [FSI FINAL REPORT 2014]
        
        ASIC administers the ePayments Code, which places requirements on financial institutions that make electronic payments that are aimed at protecting consumers. The Code requires subscribers to give consumers certain terms and conditions, sets out the rules about liability for unauthorised transactions, establishes a regime for recovering mistaken payments and requires internal dispute resolution. The ePayments Code is currently voluntary; while most ADIs are subscribers, many new entrants have not subscribed and their clients do not receive the protections in the Code.
        
        Generally. the same . The code lacks the ability to enforce any meaningful compliance.
        
        you have to be subscribed to it