The role of the Committee
The financial services industry is a complex and evolving system. Like many systems there are specialisations with specific objectives and the CCMC is one specialisation that plays an important role in the improvement of standards of practice and services within the banking sector by monitoring compliance with the Code.
This model identifies the various internal and external influences on banking standards and services, and the key stakeholders for the CCMC.
The application of the Code’s requirements should improve the standards of practice of the Banks who have subscribed to the Code.
As part of a self regulating system, there are internal checks and balances designed to monitor the commitment of the Banks to the goals and standards of the Code. These exist in areas such as Risk and Compliance, Internal Dispute Resolution or complaints areas, Quality Assurance programs and/or Internal Audit.
Within the broader financial services system there are also a number of external drivers for influencing banking standards relevant to commitments in the Code. These include areas involved in external dispute resolution, identification of systemic issues, feedback from consumer advocates and/or financial counsellors, and activities of the regulators.
The Code Compliance Monitoring Committee is also one of the areas that have an influence on banking standards.
The CCMC is responsible for monitoring compliance with the Code, investigating allegations of Code breaches and conducting reviews across the industry to identify issues and solutions regarding compliance with the Code.
CCMC function
This diagram identifies the functions and activities of the Committee that facilitate an active, risk based approach to managing compliance with the Code. The three streams of Monitoring, Investigating and Reviewing allow us to be both strategic in assisting the industry identify issues and emerging risks, while also dealing with individual instances of Code breaches.
Our role
Our role, put simply, is to make sure subscribing banks comply with the Code of Banking Practice.By monitoring compliance, we encourage banks constantly to improve standards of practice and to honour their promises to customers.
Each year, we ask Code subscribing Banks to complete a comprehensive statement addressing key aspect of Code compliance. We also engage in dialogue with subscribing Banks about their obligations under the Code.
At the same time we operate compliance-monitoring exercises such as ‘shadow’ shopping and compliance visits.
Code breaches
One of our major functions is to investigate allegations that the Code has been breached. This gives us a practical basis on which we can test bank compliance with the Code.It is important to stress here that our role differs substantially from the Financial Ombudsman Service (FOS). Their role is to provide an external dispute resolution. While there is some capacity to examine systemic issues, the focus is on resolving individual disputes, considering financial loss and 'fairness'. Code issues may or may not arise in individual disputes and a (FOS) determination of code breaches may or may not be made.
In contrast, the CCMC is not concerned with the settlement of disputes, although that may result from our involvement. We focus on compliance across the Code subscribers. While we respond to complaints of non-compliance, we are also able to be risk focused and proactive. In essence, the work of the two groups is complementary.
Although the Committee monitors compliance, the Code itself is administered by the Australian Bankers’ Association (ABA). The ABA’s role is to ensure there is sufficient coverage of the Code among industry participants and to educate subscribers and the public about the Code.
The ABA’s recent review of the Code of Banking Practice makes a series of recommendations for the future of the CCMC. It is our aim to implement many of them during 2009–10 in consultation with our stakeholders. We want to ensure the Committee remains relevant and is prepared for positive change in the years ahead.