Bank direct debit review

The Code Compliance Monitoring Committee for the Code of Banking Practice has published its report on its review of bank compliance with direct debit rules.

The aim of the review was to identify whether:

  • Banks have adequate policy and procedures to ensure they comply with the requirements of the Code; (cl.19);
  • and

  • Banks receive and process cancellation requests for direct debits without first referring customers to the business or service provider.

The review concluded that while appropriate policies and procedures were documented, 8 out of 10 of the Committee's “shadow” shoppers received incorrect or partially incorrect information. The result was similar for call centres and branches.

Overall the results did not meet the CCMC expectations of what would be reasonable considering the strong commitments expressed in the Code.

As part of the review process the Committee has met with all of the Banks concerned. The banks have undertaken a range of activities to improve performance relating to this aspect of the Code.

In addition the Committee has consulted with the Australian Payments Clearing Association (APCA), who oversee the direct entry system for payments. APCA have resolved with their members to undertake additional steps to improve direct debit cancellations and the obligations under both the Code of Banking Practice and their own Rules.

The Mutual Banking Code of Practice has similar provisions relating to the cancellation of direct debits and some of the initiatives undertaken by APCA will have an impact on Mutual ADIs.

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