Tutorial
Topic 8
Consumer Protection
Part A
1.
Explain what is an ‘unfair term under two parallel statutes.
Some of the unfair terms are defined as void under Australian Consumer Law, further
under Australian Securities and investment commission Act 2001, defines equal
provisions for financial services and financial products related to these contracts.
According to section 24 of Australian Consumer Law and according to Australian
Securities and Investment Commission Act 2001, Unfair Term has been defined.
Accordingly
✓ It would cause a considerable, significant imbalance in the rights of the parties and
also cause a significant impact on obligations arising under the contract.
✓ It is not reasonably necessary to protect the parties legitimate interest, who would
be benefited by the term.
✓ Also it would impact a detriment to a party if it were to be relied or applied upon.
Under ASIC the unfair contracts term law is legally applied if the contract is
✓ A consumer contract
✓ If its s Standard form contract
✓ If it’s a contract for financial service or financial product.
2. Explain the application of Code of Banking Practice and its initiatives to protect
consumers.
The Code of Banking Practice sets the standards of services and practice in banking industry
of Australia. These practices and services are set to individuals, small businesses, most of
the customers, potential customers who are seeking information, and also most importantly
to actual guarantors and to prospective.
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The new code of banking practice will be mandatory and enforceable and binding. The key
purpose of code of banking practice is to have an ethical way of good banking practice and
also to ensure the protection of the interest of the clients/ customers.
The major applications of the code outlines ‘manage accounts, simplified contracts,
Guaranteeing the loans, When things go wrong’.
Under section 3.1 the code defines on improving standards of service and practice,
promoting the better , ideal informed decisions about the banking services, information
provision on customer obligations as well as customer rights.
The Banking Code of Practice provides ways and means to improve banking relationship
under Part2, Protocols to open account and also on how to use banking services under part
3, defines inclusive as well as accessible banking, loan applications, lending and many more.
Under Part 2, where the banking relationship is defined the code has specified few factors
which protect the customers. Under chapter 5, the code has defined that protecting the
confidentiality of the customers takes a significant place. The Chapter 4 defines the staff
needs to be trained and competent. This is also an important factor interms of ensuring
customers duties and requirements effectively.
Further under ‘inclusive and accessible banking’ Chapter 14, they have defined that they are
taking an extra care on the customers who are experience the vulnerability which includes
customers with cognitive impairment, financial abuse , mental illness, elder abuse , agerelated impatientment serious illness and many more. Accordingly, the staff is being trained
act wisely and sensitively with respect and also with compassion to them. And also, Under
the same part the codes ensure to provide banking services to low income individuals.
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Also initially in the chapter 13 they further specifies that they are obliged to be inclusive and
accessible to all people including, their older customers, people who are with disabilities, to
indigenous Australians including in remote locations, as well as to people who are with
limited English skills. The staff is accordingly trained to fulfill the needs and requirements of
this diverse customers.
Further CDP defines that required disclosure with relate to banking charges, interest rates
should be provided to the customers which includes, copies of the documents, information
regarding operations of the account, information regarding cost of credit, Specified and
special information regarding the low income as well as the pros and cons, disadvantages of
personas.
The chapter 46 have specified that the banks having a customer advocate in the bank, under
that the banks help and support, facilitate the customers to gain fair outcomes, and also to
minimise the probability of future problems that can cause.
Therefore it’s clear that the code of practice provides initiatives to protect customers by
using easy and simple language( English), by issuing direct debits and also recurring
payments for the clients ( customers) to aid in switching Financial Institutions ( banks)
eraser, provision of better protection for guarantors, providing a significant and additional
care for vulnerable customers, notifying the guarantors in a change of the borrowers
circumstances and also by helping the customers to minimise the likelihood of the risks and
to gain profitable outcomes.
Accordingly, it’s clear that banking code of practice ensures the standards of the banking
industry and also performs a significant role in protecting it’s customers.
3. Describe when an account holder is and is not liable for losses under the Epayment Code.
E-payment code is a voluntary code which regulates all the electronic payments such as
EFTPOS, ATM, Credit Card transactions, mobile banking, BPAY and all online payments.
The Chapter C, 10 defines when the holder is not liable for loss, in here the account holder is
generally not liable for a loss which is arising from an unauthorized transaction, if the result
for that loss or the cause of the loss comes under following factors, If its caused by ,
✓ Fraudulent conduct or through negligence of others
✓ Same transaction which is debited more than once
✓ As a result, from cancelling, forged, faulty or through expired device pass code or
identifier.
When it comes to holder being liable for the loss, the e-payment code C,11 defines that if
the above clause 10 doesn’t apply on the case and the holder is liable if the
✓ The user contributes towards loss through mishandling the passcode or by fraud,
✓ The holder/ user has left the card in the ATM
✓ The user contributes towards the loss through delaying the reporting of the loss,
unreasonably or tend to misuse.
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Accordingly, the e-payment code provides these codes regarding, when a holder is not liable
to a loss and when the holder is liable for the loss.
4. Explain the role of Australian Financial Complaints Authority (AFCA) in Australia as
the financial ombudsman.
AFCA or the Australian Financial Complaints Authority is a free, and a fair , independent
resolution scheme which intends to provide fair , effective as well as independent
solutions for the small businesses and to individuals who have made complaints
regarding the financial services and financial products. Further AFCA is a non-governing
ombudsman service.
AFCA contributes on resolving problems and meeting better and vital protections from
the unauthorized transactions.
The financial complaints considered under AFCA are
✓ Banking Transaction errors
✓ Credit Listing Errors
✓ Insurance claims denials ( for example home, vehicle , trauma, travel and income
protection)
✓ Investment advice
✓ Financial Advice
✓ A trustee decision regarding superannuation account which includes distribution
of the death benefits.
Therefore, as AFCA acts and provide solutions towards the problems to financial services
as well as products in an orderly well reputed manner it can be identified as an Financial
Ombudsman.
5. Applications of E-payment code
Low Value Facilities
Contractual effect
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6. Complete the table below:
Bank’s
action
Section of the
ASIC Act?
Summary of the
section’s wording
Examples of
behaviour that
Remedies under
ASIC Act?
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breaches the
section?
Misleading
and
deceptive
conduct
12DA
Unconsciona
ble conduct
12CA
An individual must not ,
in commerce or in
trade, engage with the
conduct related to
financial services which
is misleading or
deceptive or is likely to
deceive or mislead.
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