Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017 [2017] AUSStaCSBSD 122 (10 May 2017)

• Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017
• Significant matters in delegated legislation 6

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Banking Amendment (Establishing an Effective Code of Conduct) Bill 2017

Purpose	This bill seeks to amend the Banking Act 1959 to: • require the Minister to create a Banking Code of Conduct (the Code) as a legislative instrument, review the Code every three years and consult with customers of authorised deposit-taking institutions (ADIs); • empower the Australian Prudential Regulation Authority (APRA) to receive and assess complaints by customers of ADIs; • allow APRA to impose civil penalties on ADIs that have breached the Code and require them to publish their details on their website and in newspapers; • require the Minister to review the Code every three years and consult with customers of ADIs
Sponsor	Mr Andrew Wilkie MP
Introduced	House of Representatives on 27 March 2017

Significant matters in delegated legislation ^[6]

1.9 This bill seeks to establish a Banking Code of Conduct (the Code) in legislation. Proposed section 36A requires the Minister to make the proposed Code by legislative instrument. The proposed Code forms the basis of a banking complaints system to be administered by the Australian Prudential Regulation Authority (APRA) and, as the Code is to be made by legislative instrument, represents a significant delegation of legislative power. The Code can include civil penalty provisions.^[7] Further, if APRA finds that a breach of the Code is substantiated it may 'name and shame' the offending institution.^[8] The only guidance on the face of the bill in relation to the contents of the proposed Code is that, when it is first made, 'the Code must, and must only, include standards equivalent to those in the Code of Banking Practice published by the Australian Bankers' Association as in force on 27 March 2017'.^[9] There is no ongoing guidance in relation to the standards to be included in the Code.

1.10 The committee's view is that significant matters, such as the central details of regulatory schemes, should be included in primary legislation unless a sound justification for the use of delegated legislation is provided. In this case, as the central elements of proposed banking complaints scheme are left to be prescribed in the proposed Code, these central elements of the new scheme will not be subject to the full range of parliamentary scrutiny inherent in establishing the scheme in primary legislation.

1.11 The committee notes that there is no guidance about the contents of the proposed Banking Code of Conduct (beyond when it is first made) in the primary legislation. The committee therefore seeks the Member's advice as to why it is proposed to delegate the central details of this new regulatory scheme to the Minister, rather than including at least some ongoing guidance on the face of the bill.

Pending the Member's reply, the committee draws Senators' attention to the provision, as it may be considered to delegate legislative powers inappropriately, in breach of principle 1(a)(iv) of the committee's terms of reference.

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[6] Schedule 1, item 3, proposed section 36A of the Banking Act 1959.

[7] Schedule 1, item 2.

[8] Schedule 1, item 3, proposed sections 36D and 36E of the Banking Act 1959.

[9] Schedule 1, item 4.