Code compliance and monitoring

The Code Compliance and Monitoring Team (Code Team) supports the work of independent committees that oversee five Codes of Practice in the Australian financial services sector. These Codes of Practice are:

1. Banking Code of Practice (BCCC)
2. Customer Owned Banking Code of Practice (COBCCC)
3. General Insurance Code of Practice (GICCC)
4. Life Insurance Code of Practice (Life CCC)
5. Insurance Brokers Code of Practice (IBCCC)

The Codes set standards for the institutions that subscribe to the Codes on areas of service provision, professional conduct and ethical behaviour.

The Code Team monitors compliance with the Codes and provides secretarial services to the five committees. Each committee is composed of an independent Chair, a consumer representative and an industry representative.

The Code Team works with subscriber institutions to ensure they comply with their Code obligations. This helps to raise industry standards, minimise complaints and improve outcomes for consumers.

The Code Team is a separately operated and funded business unit of AFCA. Its services are funded by the industry associations and Code subscribers.

In 2021–22, the Code Team appointed a new General Manager of Code Compliance, Ms Prue Monument. She arrived from the federal public service with extensive experience in regulation and a strong focus on improving practices for consumer benefit. Following her appointment, Mr Rene van de Rijdt, who had been acting in the role, took up the new position of Deputy General Manager.

Education and guidance

Providing resources to help subscribers understand and comply with their respective Code is fundamental to the work of the Code Team.

Sustained compliance with the Codes, and the positive outcomes that it achieves for consumers, is built on a clear understanding of the obligations and how they apply in practice. Education and guidance from the Code Team is the strong foundation for this.

The Code Team publishes a wide variety of resources that alert subscribers to specific issues of risk or concern and recommend ways of improving, including:

• reports on compliance
• operational guidance
• guidance on complying with provisions of the Code
• case studies highlighting good and bad behaviour
• findings and reports from inquiries
• determination notes
• articles.

Each Code, with its unique subscriber base, focuses its education and guidance on the needs of its subscribers and the consumers they serve.

In 2021-22, the Code Team produced a range of resources:

BCCC:

• Two reports on general compliance with the Banking Code (August 2021 and March 2022)
• The outcome of the BCCC ‘mystery shopping’ exercise that examined compliance with obligations for direct debit (September 2021)
• A report on compliance with the Code’s provisions for inclusivity, accessibility and vulnerability provisions (December 2021)
• Two guidance documents on good practice following investigations (June 2022)

These resources helped banks better understand crucial aspects of the Code and led to improvements in processes and practices that benefitted consumers.

COBCCC:

• ‘Learning by Example’ – a report examining a selection of self-reported breaches from subscribers (November 2021)
• A report looking at the data received from subscribers in their Annual Compliance Statements (March 2022)
• Two webinars on the new Code (May 2022)

These resources shone a light on issues subscribers had with Code compliance and allowed the industry to recognise areas for improvement. They also helped prepare subscribers for the new Code and its new provisions.

GICCC:

• A review report of vulnerability and financial hardship obligations (November 2021)
• Operational guidance on sanctions for breaches of the Code (December 2021)

These resources highlight the ways that subscribers should consider the crucial aspect of financial hardship and vulnerability when dealing with consumers. They provide guidance for subscribers to improve their processes and practices in this area.

Life CCC:

• Forty-one determinations that report on the outcomes of investigating alleged breaches of the Code
• A case study highlighting the obligation to issue a consumer with annual notice before the anniversary of a life insurance policy (May 2022)
• A case study highlighting the dangers of incorrectly interpreting the Code (June 2022)
• Three Guidance Notes on claims handling timeframes and the significant breach obligations of the Code (September 2021)
• The 2020–21 Annual Industry Data and Compliance Report (March 2022)

These resources provide subscribers with practical examples of certain issues with Code compliance. They provide insight into areas of concern and offer direction to subscribers in strengthening processes to comply with the Code.

IBCCC:

• Reports on the findings of two Own Motion Inquiries: the first on the importance of company culture (November 2021) and the second on the challenges the industry faced in 2020 (April 2022)
• A webinar on the new Code (October 2021)
• Four ‘Tip of the Month’ publications providing guidance on specific aspects of Code compliance

These resources highlight the importance of company culture for subscribers and offer advice on improving culture to meet obligations and provide better outcomes for consumers. They also clarify important aspects of the new Code and help subscribers understand the obligations brought on by new provisions.

Inquiries

Undertaking inquiries allows the Code Team to identify areas of concern and recommend ways subscribers can improve their processes and practices.

An inquiry is a formal examination of a particular issue. It involves identifying the scale of the issue, its root causes and its effect on consumers. While inquiries may have different focuses across the Codes and take different forms, they all seek to help subscribers understand their obligations, identifying what is working well and where there is opportunity to improve.

The valuable lessons from inquiries inform the education and guidance that the Code Team provides to its respective Code subscribers.

In 2021–22, the Code Team undertook several inquiries:

BCCC

• Banks’ compliance with obligations for deceased estates began in 2021–22 and the outcomes will be published in late 2022

COBCCC

• Vulnerability and how subscribers deal with issues concerning domestic and family violence and elder abuse

GICCC

• Implementation of certain public-facing obligations in the Code

LifeCCC

• Compliance with annual notice obligations in the Code
• Obligations for designing and introducing new life insurance policies began in 2021–22

IBCCC

• The effect of company culture on compliance
• Response to the challenges of 2020

Investigations

As monitoring compliance with the Codes is at the core of the work of the Code Team, investigations play a fundamental role.

An investigation may be initiated from different points an allegation from a consumer, a referral from AFCA, or a breach self-reported by a subscriber. The investigation may take one of several approaches, depending on multiple factors, including the nature of the allegation or breach, the industry from which it comes and the specifics of the Code obligations. This leads to a wide range in the sizes and scopes of investigations across the Codes.

Regardless of the approach, however, the aim of an investigation is consistent. It examines a potential or actual breach, recommends improved practices, identifies and issues sanctions for serious failures and reports publicly on our findings when appropriate.

In 2021–22, the Code Team undertook key investigations on a range of compliance matters. The BCCC completed two significant investigations that led to sanctions of formal warnings. For the COBCCC, this year included eight investigations. The GICCC opened 195 investigation matters and closed 184, of which it identified 64 Code breaches. The LifeCCC worked through 253 investigations, including significant breaches.

Stakeholder engagement

It would not be possible for the Code Team to successfully achieve goals and fulfil its purpose without cooperation and collaboration from the industry, consumer groups, government agencies and regulators.

The Code Team engages regularly with several key stakeholders that provide knowledge, expertise, experience and support across the industries covered by the Codes.

It works closely with industry associations on a range of matters relevant to each Code. It collaborates on updates to Codes and their implementation, as we saw in 2021–22 with the IBCCC and COBCCC. The Code Team also engages with industry in setting priorities for its work.

In its monitoring of subscriber compliance with the Codes, the Code Team plays an important role in the broader consumer protection environment. Throughout the year, it worked closely with AFCA and ASIC on complaints and issues of regulation to avoid duplication and deliver the best outcomes for consumers.

The General Manager of Code Compliance, Prue Monument, is a member of the AFCA Consumer Advisory Panel and this puts the Code Team in a central position to collaborate and cooperate with a wide range of stakeholders in the financial services industry. The Code Team benefits greatly from this experience and the shared knowledge it facilitates.

The Code Team’s engagement extended to other agencies and bodies in 2021–22. It worked with APRA, the Australian Reports and Analysis Centre (AUSTRAC) and the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) on a variety of matters across the Codes.

At the heart of the Code Team’s engagement is a commitment to improvement. It consults with stakeholders regularly on specific issues of Code compliance and, in 2021–22, the Code Team ran an open consultation on the strategic priorities for the BCCC.

The Code Team will continue to value stakeholder engagement as it sets its priorities for the coming year and aims to improve compliance with all five Codes across the respective industries.

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