Submission - Joint response to the Review of the Electronic Funds Transfer Code of Conduct (2008)

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Proposal B7

• B7Q1 Should the EFT Code protect small business consumers?
• B7Q2 If so, what, if any protections under the EFT Code should be modified for small business consumers, and why?
• B7Q3 Should the no-fault liability amount be set at 5% of the amount in dispute for disputes between subscribes and small business consumers?
• B7Q4 What definition of ‘small business’ should the EFT Code adopt?

 

B7Q1 Should the EFT Code protect small business consumers?

ASIC is considering extending the Code to protect small business consumers, with a possible increase to the no-fault liability threshold.

Consumer stakeholders believe that there should be complete consistency between consumers and small / home business as the distinction is often blurred, and the distinction has been abused in other fields (e.g. asking consumers to sign business purpose declarations in order to avoid the provisions of the Uniform Consumer Credit Code).

The convergence of consumer and business banking has increased since the introduction of Internet banking and the widespread use of a single credit card for a mix of consumer and small business purposes. It is now close to impossible to distinguish between consumer and small / home business transactions.

As noted in the 2007 Joint Consumer Submission, the terms and conditions currently provided by financial institutions are often divided into Code compliant and non-compliant sections depending on the ‘business’ nature of the transaction. The non-compliant provisions can be harsher than the compliant provisions – particularly in relation to liability and dispute resolution.

B7Q2 If so, what, if any protections under the EFT Code should be modified for small business consumers, and why?

Consumer stakeholders believe that there should be complete consistency between consumers and small / home business, and do not support any further customisation of rules.

B7Q3 Should the no-fault liability amount be set at 5% of the amount in dispute for disputes between subscribes and small business consumers?

Consumer stakeholders believe that there should be complete consistency between consumers and small / home business, and do not support any further customisation of rules. The no-fault liability amount is only a minor part of the overall EFT Code Framework, and is little used in practice. The benefits of consistent coverage will outweigh any potential benefit from amending the limit for one group of customers, who will be extremely difficult to identify in practice.

B7Q4 What definition of ‘small business’ should the EFT Code adopt?

Consumer stakeholders support the use of the Corporations Act definition.

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