The Banking Ombudsman Scheme (BOS) has published the results from its five-year review, getting an overall tick of approval for how it operates, but also 11 recommendations on how the Scheme could work better.
The Scheme published the 2024 independent review – which was undertaken by Consumer Advocacy Council chair Deborah Hart –on Friday. Hart also undertook the last independent review BOS commissioned back in 2019.
BOS has been running for 30 years and the dispute resolution service, which is 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.
For its 2024 review, Hart reviewed the Scheme against its 2023-2026 strategic plan. The independent issues paper said Hart assessed six issue areas including accessibility, independence, fairness, accountability, efficiency and effectiveness.
Hart’s report found BOS provided “excellent” information to banks, the public and its board, in ways appropriate to the audience it's targeting.
“It sets its costs and fees reasonably under a process that is both fair and transparent. A recent levy increase of 25% was necessary with the large increase in the BOS workload especially as disputes increase in number and complexity,” the report said.
Hart’s review on Friday made 11 recommendations, which ranged from rule changes, whistleblowing and increasing the number of directors on the Scheme's board.
BOS agreed with all the recommendations and said it was either already implementing or considering how to implement them.
'Publicise whistleblowing service better'
Among the 11 recommendations, the review said BOS should develop strategies to increase the visibility of its whistleblowing service within banks.
The service was established in 2021 via an agreement between BOS and the New Zealand Banking Association (NZBA) and is free for current and former bank employees, service providers, volunteers and others.
BOS doesn’t investigate “workplace wrongdoing” and instead forwards whistleblowing complaints to banks for investigation. It then follows up with the bank before reporting back to the whistleblower.
“BOS provides a reliable, independent service that provides a safe haven for whistleblowers. There is an opportunity to better promote the BOS whistleblowing service,” the report said.
In response, BOS agreed that the Scheme should publicise its whistleblowing service better among banks.
Hart also recommended that BOS consider improved ways to deal with complaints about itself.
Red flags
Hart’s other recommendations included the BOS amending its Terms of Reference (TOR) so the Scheme can deal with complaints against recipient banks – provided banks amend the Code of Banking Practice to institute rules relating to recipient banks, which Hart said BOS should encourage them to do.
This was because Hart’s review had heard from a complainant that felt his case included “red flags for both the sending and receiving banks”.
However, there had only been a partial investigation into the complainant’s case which involved investigating the actions of the sender bank where the complainant had their banking relationship.
This is because BOS doesn’t – currently – have the power to consider a complaint about a recipient bank and so in order to have their complaint considered, a complainant must be the person directly interacting with the bank.
“This frustrates cases being pursued when a complainant believes that a recipient bank has acted inappropriately,” the report said.
BOS agreed that its terms of reference should be amended to deal with complaints against recipient banks – provided enforceable obligations on recipient banks are put in place.
“We will encourage banks to institute rules relating to recipient banks,” BOS said.
Hart’s list of 11 recommendations can be read in full here along with BOS’ responses.
Positive report card
Banking Ombudsman Nicola Sladden described the review as a “positive report card”.
“It confirms that we are making a valued and credible contribution to a fair banking sector,” she said, adding that BOS was committed to continuously improving how it worked, and the report would help in that effort.
“We know there are areas where we can improve as we grow in size and face increasingly complex cases, especially those relating to fraud and scams, which continue to make up a large share of our workload,” she said.
“We will continue to work with government agencies, regulators, banks and consumer groups to ensure fair outcomes in a cost-effective and transparent way.”
In its June-2024 annual report, BOS reported a record number of 6,054 cases that the Scheme was involved with over the 2023-2024 period.
The Scheme’s workload was up 8% compared to a year earlier and scam-related cases rose 27%, comprising one in five cases which was a new annual high.
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