Antony Buick-Constable, Deputy Chief Executive
Most of us have bank accounts. If you do, it’s worth checking out the revised Code of Banking Practice that was launched on 1 June 2018. Your bank wants you to have a good experience, and the latest Code shows you how they’ll do it.
Banking is all about meeting customer needs and helping you get to where you want to be. To do that your bank knows it has to treat you right. Taking care of customers is also essential to maintaining public trust and confidence in banking, which in turn supports our growth as a country. For these reasons the refreshed Code of Banking Practice has an important role to play.
While the Code of Banking Practice has been around for over 25 years, the latest edition takes a fresh approach that aims to boost its relevance and make it easier for customers to understand what their bank will do for them.
The Code was first introduced in 1992. As the relationship between banks and their customers has evolved over the years, it feels like the right time to bring the Code into the 21st century.
The revised Code states what customers can expect from their bank in a simple way. It is intentionally high-level and sits above the detail of bank terms and conditions.
The Code sets out five promises that banks make their customers.
It says banks will treat their customers fairly and reasonably. They’ll communicate clearly. They will protect customer privacy and security. They’ll be responsible lenders. And they’ll deal effectively with customer complaints.
These few words say a great deal about what you can expect from your bank. While the new Code is shorter and easier to read, in no way does it reduce what banks will do for their customers. In fact it raises the bar because banks will have to think carefully about how their conduct meets the customer promises in a particular case.
The refreshed Code will more easily keep up to date with banking innovation. For example, the previous edition had a whole chapter on cheques and only a couple of clauses on mobile banking. That doesn’t make sense in a world where cheque use is declining year-on-year, and mobile banking is hugely increasing. A higher level principles-based approach avoids the Code quickly getting out of date in light of changes to the way we prefer to do our banking.
The new edition also fits better with the changing regulatory environment. Consumer law and regulations have been enhanced over recent years, and there are more changes on the way. For example, we now have the Responsible Lending Code under the Credit Contracts and Consumer Finance Act. We’re also looking at changes coming in through the Financial Advisers Act, which propose new customer-first obligations for financial advisers.
All of this took time. We started thinking about an easier to read and more accessible Code back in 2015. We talked to consumer groups and took on some very valuable feedback to make sure we got it right.
Our latest Code is quite different from other countries, including Australia. There they have a different framework for their Code of Banking Practice that requires a more prescriptive approach. By contrast, our new Code focuses on customers and what they can expect from their banks.
We consulted closely with the Banking Ombudsman on the revised Code because it goes hand-in-hand with the Ombudsman’s role. If you’re not happy with the way your bank has responded to your complaint, the Code says you can take it to the Ombudsman to sort out. The service is independent of the banks, and free to customers.
New Zealanders rate their banks highly in customer satisfaction surveys. That’s not just because banks are providing the kind of experience customers want. It’s also because banks operate in a very competitive environment and work hard to keep their customers happy. That includes putting right any problems quickly and fairly.
The latest Code also provides the Banking Ombudsman with more flexibility in determining what good banking practice is. That’s important because customer expectations may change over time. This flexibility will help keep minimum standards in line with those expectations.
If you’d like to know what you can expect from your bank, you can pick up a copy of the latest Code in your local bank branch. It’s also available on your bank’s website and here: https://www.nzba.org.nz/consumer-information/code-banking-practice/code-of-banking-practice/.