Banks propose slashing code of practice
"The devil will be in the details which are the terms and conditions you sign up to." Sue Chetwin, Consumer NZ chief executive
The thorny issue of who should carry the can for internet banking fraud could be back up for discussion, with the Bankers’ Association proposing a revised and massively shortened code of practice for the industry.
The existing code of banking practice runs to almost 10,000 words and sets out in some detail the rules that underpin banks’ individual terms and conditions on a range of matters.
The Bankers’ Association has proposed replacing the code with a far shorter 1200-word document that makes no direct reference to fraud liability. The current code has been criticised for being contradictory in places and offering banks more protection than consumers.
In the past, the clauses in the code that deal with fraud have generated the most controversy. But the current code nevertheless states as a ‘‘guiding principle’’ that banks would reimburse ‘‘genuine victims of internet banking fraud’’.
The new proposed code removes that specific industrywide commitment, instead setting out only high-level principles – such as a commitment by banks to deal with customers ‘‘fairly, reasonably and in good faith, in a consistent and ethical way’’.
Bankers’ Association chief executive Karen Scott-Howman said banks were proposing a shift to a less prescriptive ‘‘principles based approach’’ that didn’t try to replicate demands and safeguards in their own terms and conditions.
That would appear to mean consumers may need to pay more attention to their agreement with their own bank and keep abreast of any changes to fine print that could impact their rights and obligations.
Consumer NZ chief executive Sue Chetwin didn’t believe banks would use the opportunity to water down their own guarantees with regard to fraud.
‘‘If the banks did dig their heels in then the banking ombudsman would be a place to go and might take a different view.’’
Consumer NZ was consulted in advance on the draft code and believed it was ‘‘pretty innocuous’’, she said.
‘‘The devil will be in the details which are the terms and conditions you sign up to.’’
Banks attempted to shift the liability for internet banking fraud on to consumers in 2007 but backed down after a backlash from the media and consumer groups, before the code was fudged in 2012.