This chapter has dealt with ‘traditional’ banking services. It has not dealt with issues arising in connection with financial advice, superannuation or insurance and has not considered the larger questions of culture, governance and remuneration examined in later parts of this Report.

Some changes should be made in connection with traditional banking services.

I am not persuaded that the NCCP Act’s framework for responsible lending to consumers needs change. The responsible lending issues identified during the Commission’s hearings will be resolved by banks applying the law as it stands. As I have explained, however, reform is required to other aspects of home lending: to the duties of mortgage brokers and to the remuneration structures associated with home lending. Other reforms affecting consumers are also necessary, including removing the exemption of retail dealers from the operation of the NCCP Act and several reforms to improve the accessibility of banking for all Australians.

While I do not consider that the NCCP Act should be extended to apply to lending to small businesses, some reforms are needed in this area. A number of them concern agricultural loans, including introducing a national scheme of farm debt mediation, strengthening standards for valuations and not charging default interest in certain circumstances.

The changes I recommend in relation to consumer lending and lending to small businesses are underpinned by two broader changes: one directed to improving the ways in which banking products work by introducing a responsibility for product design, delivery and maintenance into the BEAR; and the second directed to making the promises made in the Banking Code more meaningful by introducing statutory consequences for breaching key provisions of the Code.