Consumer rights for bank customers

There are a lot of cliches that are pretty meaningless, but in the case of “Knowledge is power” – that’s not so. Having a clear understanding of your consumer rights can help protect you and your finances. Guest writer, Nigel Bowen talks us through consumer rights in the world of banking.

One of President John F. Kennedy’s lesser-known achievements was kick-starting a movement that would revolutionise the way businesses and their customers interact over the following half-century. He did that by defining and advocating consumer rights on March 15, 1962.

For the last three decades, World Consumer Rights Day has been celebrated on March 15 and to celebrate the 51st anniversary of Kennedy’s seminal speech, we’re surveying the protections that have been put in place for bank customers in Australia.

Fiscal security

In general, your bank is required to ensure the following:
• Your money is safe and secure.
• Your personal information is kept confidential.
• You are notified about changes to terms and conditions and fees and charges.
• You receive or have access to the relevant information about banking services.
• You receive or have access to a statement of account.
• You have access to fair debt collection and handling procedures.

While individual banks may adhere to further rules depending on their own codes of conduct, all banks operating in Australia must generally adhere to at least the requirements listed above.

The fair deal

On July 1, 2010, the  the laws changed around consumer contracts, including those for financial products and financial services. Standard form consumer contracts are now void if they include any unfair terms. A term is considered unfair if:
• It would cause a significant imbalance in the parties’ rights and obligations arising under the contract.
• It is not reasonably necessary to protect the legitimate interests of the party who would be advantaged by the term.
• It would cause detriment (financial or otherwise) to a party if it were to be applied or relied on.

For example, in relation to a high interest savings account, it would likely be considered fair for a bank not to pay the promised interest if the customer failed to make the minimum agreed monthly deposits, but unfair to seize the original amount he or she deposited. Also, the terms of a consumer contract should be expressed in reasonably plain language, presented clearly and readily available to all parties.

ASIC runs MoneySmart, which offers free advice to consumers wanting guidance on making the best choices when it comes to banking and investing their money. Visiting the website before making any important financial decisions may save you a lot of time and money down the track.

Complaints procedures

If you believe a bank has behaved unreasonably or unethically in relation to one of its products or services, you should direct your initial complaint to the bank in question. If the bank fails to resolve the problem to your satisfaction, you should then contact the Financial Ombudsman Service.

Australia has strong consumer protection laws in place, but that doesn’t mean things can’t go wrong. Always be aware of what your rights and responsibilities are when entering into any sort of relationship with a bank and don’t delay in raising your concerns if you’re uncomfortable with the way the bank is operating.