It's important to know your rights when it comes to your relationship with your financial institution.
Consumers have a lot of rights when it comes to dealing with banks, but they don't know much about them. At the end of January, the Australian Bankers' Association (ABA) released a revised version of its standards for good banking, the Code of Banking Practice.
The voluntary code is a guide for banks to follow when dealing with their customers.
Equally, customers who are familiar with what it says can use it to assert their rights when dealing with a bank.
Not many people know that a set of guidelines for good banking practice exists. The executive director of Financial Counselling Australia, Fiona Guthrie, says the revised code is welcome but many people are still not getting access to the right banking products and services.
"There is more to be done," Guthrie says. "We would like to see the banking industry proactively identify customers and advise them of the existence of appropriate accounts and services."
Even the ABA concedes that community awareness is low. Only 25 per cent of people know their bank is obliged to provide hardship assistance.
Critical issues that the code addresses include problems with cancelling direct debits, arranging chargebacks, applying for assistance because of hardship, and a good deal for older customers.
Cancelling direct debits Last year an independent compliance monitoring group, the Code Compliance Monitoring Committee, conducted a shadow shopping exercise and found that in a third of cases staff at financial institutions informed customers that they could not cancel a direct-debit arrangement (automatic payment of a regular bill), and the customer would have to lodge a request with the merchant.
The Code of Banking Practice makes it clear that a bank must act on a customer's request to cancel a direct debit. There is no requirement for the customer to contact the merchant.
Chargebacks Customers often report that they have difficulty getting a payment reversed when the goods paid for have not been delivered.
The code is clear: as long as the customer notifies the bank within a required time frame (this will vary from bank to bank), the bank is obliged to claim the chargeback on behalf of the customer.
Customer facing financial hardship In its 2011/12 annual report, the Credit Ombudsman Service (COSL) says lenders are failing to give proper consideration to applications from borrowers in financial hardship. The COSL says disputes over hardship applications made up 34 per cent of complaints that year.
A common complaint is that the lender failed to respond to an application for a debt payment variation.
The ABA's chief executive, Steven Munchenberg, says the main focus of the code revision is to provide additional support for people in need. He says stronger financial hardship provisions will put the onus on banks to be more alert to customers in financial difficulty and respond promptly to requests for assistance. Banks are encouraged to contact customers they believe are struggling, rather than wait for the customer to contact them.
Older customers Code signatories have an obligation to improve access to services for older customers and people with disabilities. The code says: "If in the course of speaking with you in relation to your accounts, we become aware that you may be the holder of a Commonwealth Seniors Health Card, Health Care Card or Pensioner Concession Card, we will provide you with factual information about our accounts which attract no or low standard fees and charges."
Older customers can improve their chances of getting access to fee-free banking by making sure they tell the bank what their situation is.
The code, which can be found at the ABA website, also covers rights and obligations relating to foreign exchange services, privacy, loan guarantees and debt collection.