This ability to provide a customer’s perspective measured against the Banks’ own policies and procedures provides some compelling information for Banks regarding their compliance with the Code.

This year the Committee finalised one major review into compliance with the direct debit provisions of the Code (clause 19) and published a comprehensive report, following consultations with each of the Banks.

Direct Debits Review
The nature of Australian banking has moved steadily away from paper and cash towards more convenient ways of conducting financial transactions. The ‘direct entry’ form of banking – the crediting and debiting directly into and from bank accounts – is increasingly valued by consumers and business alike.

In 2008 the average number of direct debit transactions per business day exceeded two million with the average value per business day exceeding $17 billion (AUD).

One way consumers and small business can control the direct entry system for direct debits is via clause 19 of the Code of Banking Practice. This enables the customer to cancel direct debits at their own bank rather than through the business or service provider. This clause was added during the last Code Review, to deal with difficulties consumers had cancelling direct debit transactions.

In February 2008, the CCMC began a review into clause 19 to identify how far Code subscribing Banks met their commitment to consumers and small business. The review was divided into two phases: first, the gathering of data and assessment of policy and procedures; second, a program of social and market research to measure compliance from the consumers perspective.

The first phase of the review identified that all Banks had systems in place that would provide customers with outcomes required by clause 19. The second – using a research technique known as ‘shadow' or ‘mystery’ shopping – found that eight out of ten 'shadow shoppers’ received incorrect or partially incorrect information. The results did not meet the CCMC’s expectations of what would be reasonable given the strong commitments expressed in the Code.

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The CCMC met with all of the Banks involved in the review. We are pleased with the way the Banks have received the results and responded to our concerns. We are in agreement that the outcome we wish to achieve is to improve consumer and small business confidence in the use and cancellation of direct debits. As a consequence, the Banks have undertaken a range of activities to identify why the problems occurred.

Having established a benchmark, the Committee will retest compliance in the next six months or so and should be able to identify any shift in the customer service associated with cancelling direct debits.

‘Direct Debits - A review into the operation of Clause 19 of the Code of Banking Practice' can be found on our website at: www.bankcodecompliance.org

Total - Count of Compliance


Industry results
The results were classified into three possible outcomes:

The national result was aggregated across the various states call centres and branch networks and identified that 8 out of 10 “customers” received incorrect or inadequate advice in relation to the cancellation of direct debit request.

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