Banking Ombudsman Scheme commissions Deborah Hart to tackle new independent review of the Scheme which will assess six issue areas including accessibility and fairness

The Banking Ombudsman Scheme (BOS) has quietly commissioned an independent review of its framework and hired Consumer Advocacy Council chair Deborah Hart to undertake it.

The dispute resolution service, funded by levies on its bank members, is required to commission an independent review and provide a report to the Minister of Commerce and Consumer Affairs every five years. BOS has been running for 30 years. Hart also undertook the last independent review BOS commissioned back in 2019. 

In her 2019 report, Hart said the Banking Ombudsman met the legislative requirements for an approved scheme, complied with its terms of reference and was meeting its own strategic objectives.

“It is outward-looking and proactive in finding ways to both prevent disputes and resolve them. It has also been nimble in responding to changing conditions,” she wrote in the report dated December 2019.

Hart will review the Scheme against its 2023-2026 strategic plan. The independent issues paper said she would be assessing six issue areas including accessibility, independence, fairness, accountability, efficiency and effectiveness.

Hart, a solicitor, is the former executive director of the Arbitrators' and Mediators’ Institute of New Zealand. Among other roles she has also chaired New Zealand's independent electoral review and currently serves on the Human Rights Review Tribunal and the board of Grocery Action Group.

Because Hart had undertaken the last independent review of the BOS, the Scheme said she was “ideally placed” to examine its progress against Hart’s previous recommendations.

One of Hart’s recommendations in her 2019 report was that BOS should develop strategies to “increase its visibility” through banks to consumers.

Another was that BOS should consider pursuing a memorandum of understanding (MOU) with either the Reserve Bank of New Zealand (RBNZ) or the Commerce Commission – or alternatively – establishing an arrangement involving the RBNZ, Financial Markets Authority (FMA), the Commerce Commission, and BOS.

The RBNZ announced in June 2020 that it had entered an MOU with the Banking Ombudsman Scheme.

Submissions on the 2024 independent review are open until the 21st of June. The review appears to have been announced via a post on the BOS website on May 17.

After the completion of the independent review, the Banking Ombudsman will then provide a report to the Minister of Commerce and Consumer Affairs Andrew Bayly.

Conversation starter

Banking has been a big topic of conversation this year, with banks under fire over scams targeting their customers. Bayly has ordered banks, by September, to come up with a voluntary reimbursement scheme for customers who have been scammed.

Bayly has also announced the rules of the four government approved dispute resolution schemes will be aligned, and the maximum amount the schemes can award will increase to $500,000 so more consumers can settle financial disputes without going to court. Changes are to be in place by July 18. The Banking Ombudsman currently can’t award more than $350,000.

Finance Minister Nicola Willis announced last week Parliament’s Finance and Primary Production Committees would jointly investigate bank competition, including how banks treat homes versus farms. The Finance Committee will lead the inquiry, collaborating with the Primary Committee, which will concentrate on rural banking matters.

The Commerce Commission also released its draft report from its retail banking competition market study back in March. Commerce Commission Chair John Small said the draft report highlighted an “apparent focus” by NZ’s four major banks on preserving profit margins.  This focus had led to continual underinvestment in their primary technology systems, limited innovation, steady market shares, and consistently high profitability, he said.