EXECUTIVE SUMMARY OF A CORRUPT 2004 BANKING CODE
Information sourced from bankinfoline.com
In 2010, a very detailed and thorough document was submitted to and accepted by the Australian Senate on Banking Reform. It’s known as “The Australian Bankers Problematic Code” paper.
This letter attempts to highlight the most important sections of it, to give a high-level overview of the document, so it can be exposed to the public and not kept hidden under layers of banking misconduct and media blackouts.
The Problematic Code paper follows the 18 year evolution of banks being forced (by threat of government regulation after Senate reports in 1991) to document rules, which governed their behaviour towards customers. This document is known as the “Banking Code of Practise” and the banks have been contractually bound to them since 1996. In a publication on 1 November 1993, senior bankers, Commonwealth Bank’s David Murray and NAB’s Don Argus, were said to have agreed to be contractually bound by the code if government allowed banks to manage it.
This code is monitored by 3 people, the “Code Compliance Monitoring Committee” (CCMC), and their job is to investigate and make a determination on “Any and All complaints” made by the public against the code subscribing banks behaviour. (cl. 35.7)
In 2003, unsatisfied with the original practices, ANZ’s John McFarlane and St George Bank (now Westpac’s) Gail Kelly, and senior Australian Bankers Association officers redrafted the code introducing loopholes in the previously high-principled process. With the introduction of loopholes 16 banks agreed with the changed practices and became code signatories.
A year later, in 2004, banks agreed it wasn’t enough and sought to benefit themselves even further.
A new layer was secretly added so that the CCMC was no longer at liberty to investigate “Any and All complaints..”. This is because the 16 signatories formed a new group known as “The Code Compliance Monitoring Committee’s Association” (CCMCA) and they wrote their own rules as to what banks had to investigate. They set these new rules out in a document they called “the Constitution”. The Constitutions terms were so restrictive towards the job of the CCMC, that to date the independent Code Compliance Monitoring Committee have only investigated 250 complaints alleging the banks have breached the code.
The “Constitution” was never published, its restrictions were never made public and the CCMCA members never announced as a public group. The directors of the 16 banks and their CEO’s wrote a new set of rules setting out what this supposedly independent body they appointed called the Code Compliance Monitors were allowed to investigate.
Since 2004, the directors of major banks have told their customers and customer’s lawyers, and the public, that if a customer or small business signs a bank’s contract they will be protected as the code is contractually binding. However the Problematic Code paper sets out how a new set of banking ethics have evolved and the paper names banks, the bank directors and other people who sat benignly allowing banks to introduce corrupt practices that cripple customers.
You might ask how could this happen, was it uncaring legislators or sleepy regulators? It’s probably both.
In 2008, the previous Code Compliance Monitors, acting as whistleblowers, exposed the scam prior to resigning. The Compliance Monitors were appointed by and paid for by the signatories banks to investigate any allegation, by any person a bank breached the code. The Constitution, however, meant banks didn’t have to do that. By not requiring banks to investigate complaints, customers were forced to take banks to court if they breached a contract.
And that, as everyone knows, is costly, lengthy and a futile battle.
Examples as to how this can affect individuals, are evident in the Priestly case. Had the bank provided a fair and independent complaints procedure, they probably would not have spent the last six years battling it out with their bank in courtrooms across the state, and ultimately, losing their house and farm in January, this year.
The Priestley complaints
On 26 January 2013, the Priestley’s, having read “The Australian Bankers Problematic Code” paper set out their experiences and concerns in complaints sent to Mr Michael Chaney AO and NAB Directors. The bank breached its contract by failing to investigate the complaints which are serious.
In 2013, a principled banker would investigate the following complaints and respond, if the NAB had nothing to hide. However, to date there has been no official response so, instead, we will follow the NAB investigation as it unfolds, keeping in mind the Compliance Monitors had a contractual duty to name and shame bankers breaching the code.
Following years of failed attempts to have their bank complaints investigated, on 26 January 2013, the Priestley’s referred the following complaints to the NAB Directors, alleging:
1 In 2012, National Australia Bank directors intentionally or recklessly allowed its CEO, Mr Cameron Clyne, to breach the bank-customer contract when the NAB failed to investigate all the Priestley complaints, copies of which were sent directly to him.
2 Since 20 February 2004, the NAB changed terms of its contract, which meant Farmer-NAB contracts and small business-NAB contacts were potentially non-contracts and not binding.
3 The NAB, and other signatory bank officers, instructed their managers and lawyers to keep the “Constitution” and thus changed bank-customer contracts from the courts for a decade as the courts might not hear their cases.
4 The NAB, and other signatory bank officers, and bank representatives, asked customers to sign contracts when they knew or should have known the contractual rights were changed causing customers financial disadvantage.
5 The NAB’s and other signatory bank CEO’s were members of the Code Compliance Monitoring Committee’s Association that created and relied on the constitution to conceal a countless number of contract breaches.
6 According to Mr Andrew Wilkie’s 2012 press release, there have been 2.5 million bank complaints since 2004, yet only 250 investigations, which was when the changed terms in the started to truly strip away bank customers rights.
7 For a decade, Code Compliance Monitors were dishonest and their actions corrupt allowing people to believe they could investigate and make a determination on any allegation a bank breached the code when they had no such powers.
8 Since 2004, NAB and ABA’s conduct was dishonest and their actions corrupt when they published untruthful statements intended the make the Australian public believe code signatory banks would comply with the code and investigate all code breaches and complaints.
9 In 2012, the NAB instructed lawyers to attend court and keep from His Hon. Justice Peter Garling the truth about the Problematic Code and by their silence they allowed the court to still believe the code was contractually binding.
NAB’s internal dispute resolution process
Mr Michael Chaney AO and Directors of NAB told all their customers that the bank has an internal process for handling disputes (Cl. 35.1).
● It will be free of charge (Cl. 35.1(b));
● We will adhere with timeframes specified in the contract (Cl. 35.1(c);
● We will notify the name and contact number of the NAB person investigating your dispute (Cl. 35.2); and
● Within 21 days of becoming aware of the dispute we will inform you of the outcome (Cl. 35.3).
What Mr Michael Chaney AO and NAB Directors also said. The bank:
● Has a dispute resolution process available for all complaints unless resolved to your satisfaction (Cl. 35.7);
● Will provide customers with the above information in writing (Cl. 35.8);
● Will provide information to customers in plain language (Cl. 2.1(d)); and
● Will act fairly and reasonably towards customers in consistent and ethical manner (Cl. 2.2).
The last four dot-points relate to all complaints, which signatories to the Code of Banking Practice and NAB contractually agreed to provide customers since 2004. NAB might believe that customers can agitate complaints in the courts and have their say, however only the bank has the benefit of having unlimited funds to fight in the courts.
Nobody could believe customers could lodge 2.5 million complaints since the “Constitution” was introduced and therefore, depending on NAB findings and with new information to hand, individual and small business customers who have lodged complaints since 2004 can ask them to be re-heard. Especially if the banks had been hiding behind these secret documents, and which may have influenced the judgement in the first place.
This time by a truly independent, non-bank appointed /funded committee giving customers who suffered adverse court judgements since 2004, a chance to finally have their day out of court and be heard in full.
A fair go. It’s not much to ask for really.