22 August 2016
Statement from Australian Bankers’ Association Chief Executive Steven Münchenberg:
“The Australian Labor Party has claimed there has been an increase in customer complaints to the Financial Ombudsman Service (FOS) as justification for a royal commission1. Labor’s claims however are based on selective and misleading use of complaints data.
“First, Labor has looked at only one category of complaints, those relating to credit. This obscures the fact that customer complaints to FOS have actually fallen 11% since their peak in 2011-122 . The claim that “the number of people getting ripped off has been going up and up” is inconsistent with the data.
“Second, by using 2008-09 as the baseline, Labor has failed to acknowledge that, in 2010, the national credit law regime came into effect3. Prior to the introduction of the national credit law regime, consumer credit was regulated by the State-based Uniform Consumer Credit Code. With the introduction of the national credit law regime on 1 July 2010, the jurisdiction of FOS expanded considerably and customers were able to take a wider range of complaints about credit to it. This also expanded considerably the number of financial services firms that had to belong to an external dispute resolution scheme. A review of FOS’ terms of reference in the same year further expanded its jurisdiction4. By using 2008-2009 as the baseline, Labor has ignored these developments.
“Had Labor instead used 2010-2011 as the baseline, after the introduction of these changes, the figures would have looked very different. Between 2010-11 and 2014-15, credit complaints increased by only 13%. In fact, last year complaints about credit were lower than they were in 2011-2012 or 2013-2014.”
The following table gives the actual complaints received by FOS5.
“On any given day, millions of people and businesses will interact with banking products and services. While banks always try to get it right, that doesn’t always happen. The FOS statistics show that customers are exercising their rights and the system is working. The Federal Government is also reviewing FOS to expand it even further. The banks support this. We’re taking action now to improve the way we handle customer complaints. We don’t need yet another inquiry and another report.”
1Leader of the Opposition: “There’s already an ombudsman in place but the number of people getting ripped off has been going up and up”, Australian Financial Review, 21 August 2016; Shadow Financial Services Minister Katy Gallagher “This is one of the reasons why we would argue that we need to have a very systemic look at Australia’s banking system and the financial services system more broadly”, ABC Radio AM, 21 August 2016.
2Minister for Revenue and Financial Services, Labor Missing Key Details, media release, 21 August 2016.
3National Consumer Credit Protection Act 2009 (C’th)
4Financial Ombudsman Scheme, Annual Review, 2010-2011
5Financial Ombudsman Scheme, Annual Review, 2010-2011; Annual Review, 2014-2015.
Australians affected by the catastrophic bushfires across parts of Australia are encouraged to contact their bank to access a wide range of assistance available.
Senior bank representatives have today heard firsthand of worsening drought conditions from farmers affected at a roundtable convened by AgForce Queensland. The roundtable, held at the request of AgForce just outside Toowoomba in Nobby, brought together senior banking representatives responsible for agricultural lending as well as local farmers and community groups. CEO of the Australian… Read more »
The Australian Securities and Investments Commission (ASIC) has given the final approval for a new version of the Banking Code of Practice 2019 that implements recommendations of the Royal Commission. The approval comes after the Australian Competition and Consumer Commission (ACCC) gave authorisation in November this year for the Royal Commission changes to the Code… Read more »