The Banking Tribunal

As a way of avoiding having a Royal Commission into the Banks’ conduct, the Government is now floating the idea of  introducing a banking tribunal.  My impression is that it will be something like the FOS with its key feature being that it will be a no cost jurisdiction.

I’ve already aired my views about the need for a Royal Commission so I will not go over that issue again.  These type of tribunals sound attractive but unfortunately like many things the myth and the reality are very different.  The problem with them is that unlike a Court they don’t have processes in place to properly resolve disputes.  In particular they lack 4 key things.

The first of these is a discovery/subpoena power.  These types of tribunal are dependent on the parties producing relevant documents – whether they will actually do so is questionable.  Because the tribunal doesn’t have a subpoena power the tribunal will not be able to obtain documents from third parties.

The second is the ability to receive and consider oral evidence.  These type of tribunals decide matters solely on the basis of written submissions.  In my experience parties say all sorts of things about factual matters that would not be willing to say (and/or be able to prove) if they had to produce a sworn witness statement.  An allied issue is that it is very difficult for these types of tribunals to resolve conflicts between evidence (when I say evidence what they are usually considering are bald assertions as to factual matters that are made in written submissions).

Third, they don’t have a process for oral submissions to be made.  They decide things on the basis of often very lengthy and convoluted written submissions.  In my experience this can result in the decision maker focusing on irrelevant matters or misunderstanding important legal or factual issues.

Finally the decision make is not a Judge.  It takes a very high level of skill and experience to properly consider evidence and to make a fair decision in the context of that evidence.  In my experience many decision makers simply lack the skills and experience that would be required to be appointed to be a Judge.

In my view the Government rather than creating a new Tribunal should be a looking at ways to make the Court system more available to consumers.  An obvious place to start would be to amend the costs rules that apply to litigation such that where a consumer was involved in litigation with a bank each side would have to bear its own costs (that is the consumer would not be liable to pay the Bank’s costs if the litigation was not successful).  This simple change would bring about a radical shift in the balance of power between banks and their customers.

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