Bank code under fire over data, fraud loss
Consumer NZ has criticised a proposed new code of banking practice that would remove a key protection for people who use internet banking.
Chief executive Sue Chetwin said the New Zealand Bankers Association (NZBA), which has been responsible for drafting and carrying out public consultations on the code, had also been unwise to decide to keep the submissions it had received confidential until the new code is finalised.
The NZBA issued a proposed new draft code of banking practice in June, which its spokesman, Philip van Dyk, said it aimed to finalise ‘‘in the new year’’.
The draft code would do away with a ‘‘guiding principle’’ in the current code that states banks will continue to reimburse ‘‘genuine victims of internet banking fraud’’, instead giving individual banks a free hand to set their own policies in their terms and conditions.
Chetwin said she was concerned by the proposal to remove the guiding principle regarding fraud liability.
‘‘We have made that point in our submission, that customers have to be assured that if they are innocent victims then they should still be compensated.’’
The deadline for public submissions on the code passed in July, but van Dyk said the NZBA had decided only to release them once it finalised the code, ‘‘so it’s clear how we’ve responded to submissions’’.
Van Dyk indicated the NZBA would not comment on whether the intent of keeping submissions under wraps was to stifle debate on the proposed changes.
Chetwin supplied a copy of Consumer NZ’s submission on the draft banking code to Stuff and said she did not understand the association’s stance.
‘‘I don’t think that not making the submissions public is a very wise idea. It doesn’t really benefit anybody, and certainly the submitters I suspect have no problems with them being made public.’’
Banks previously attempted to shift more of the liability for internet fraud onto consumers in 2007, but backed down in the wake of pressure from the media and consumer groups, including Consumer NZ and InternetNZ.
The backlash ultimately resulted in banks incorporating the ‘‘guiding principle’’ into a fudged code in 2012.
InternetNZ deputy chief executive Andrew Cushen said it did not made a submission on the proposed revisions last year, because it had not been aware consultations were taking place.
‘‘In fact, the Bankers Association hasn’t asked or made us aware that they were rethinking this code,’’ he said.
Van Dyk responded that it was arranging a meeting with InternetNZ to discuss the review of the code and to seek its feedback.
‘‘We’re keen to hear the views of interested parties,’’ he said.
Chetwin said she sympathised with the NZBA’s goal of simplifying the existing code of practice.
‘‘They set out to do this thing with the best will in the world, but they have struck a few problems along the way – the whole security issue being one of them.
‘‘To be fair to the Bankers Association, I think they have tried to simplify the code which [is] ridiculously big, but in simplifying they have come across a few problems and we have noted these to them.’’