Discussion Paper: Book Up 20 March 2006 Australian Bankers‟ Association Inc. ARBN 117 262 978 (Incorporated in New South Wales). Liability of members is limited. Table of Contents 1. Introduction ------------------------------------------------------------------------------- 1 2. Background ------------------------------------------------------------------------------- 1 2.1 What are the potential problems with Book Up? ................................... 1 2.2 What are the possible alternatives to Book Up? ................................... 2 2.3 What has the banking industry been doing to address Book up and Indigenous banking issues? ................................................................... 3 2.3.1 Merchant agreements ............................................................................................ 4 2.3.2 Member banks programs ...................................................................................... 5 3. Options for regulating Book Up ---------------------------------------------------- 6 3.1 Increase public awareness and education ............................................. 6 3.2 Introduce an improved voluntary code .................................................. 7 3.3 Amend merchant agreements ................................................................. 7 3.4 Amend the law ......................................................................................... 8 3.5 Adopt a mandatory code ......................................................................... 8 4. Conclusion ------------------------------------------------------------------------------ 10 Discussion Paper: Book Up 1. Introduction Book up practices, when managed well, can offer valuable and needed services to remote and rural communities, particularly Indigenous communities. A book up facility at a local store may be the only access to credit or cash for some distance. Therefore, the ABA believes that strategies to address book up will require a partnership approach that: Understands what is of concern to Indigenous communities, and Understands how best to address these concerns. There has been an evolution in the financial services sector over the last twenty years – shifting customer needs, advances in technology, increasing competition, innovation in products and services and changing regulation – resulting in challenges and opportunities for banking services in remote and rural communities. The ABA supports the proposal to introduce a mandatory code governing book practices under the Consumer Affairs and Fair Trading Act. The ABA considers that any approach to the regulation of book up should acknowledge that an immediate prohibition may have adverse consequences for Indigenous and other remote or rural communities. Therefore, the ABA considers that any legislative or regulatory strategy seeking to restrict book up practices should be coupled with awareness raising education for merchants and financial literacy training for consumers. The ABA supports the Northern Territory Government‟s action to address concerns with poor book up practices. The ABA has also been supporting the Australian Securities and Investments Commission (ASIC) initiatives seeking to educate Indigenous communities about some of the pitfalls of poor book up practices. 2. Background 2.1 What are the potential problems with Book Up? The ABA understands that the Northern Territory Government and ASIC have received complaints regarding some book up arrangements. Based on the feedback provided to the ABA regarding some book up arrangements, we consider that there can be a number of problems with book up that can undermine consumer protection and consumer confidence in the EFTPOS system. Lack of transparency: Frequently book up is managed in a non-transparent manner. Sometimes there is minimal disclosure about the price of the goods or services by the trader or business owner. Sometimes consumers may not be aware of the amount being withdrawn from their accounts, making budgeting difficult. Merchants and consumers are tending not to keep good records of how much is being spent or is owed. Lack of accountability: Sometimes merchants do not set withdrawal limits, which means that consumers can spend more than the funds available in their account and therefore end up with excessive debt. AUSTRALIAN BANKERS’ ASSOCIATION INC. 2 High administration fees (including possibility of banks fees, such as „penalty fees‟ due to overdrawn accounts): Sometimes merchants charge fees for service or charges fines for the return of a debit card. In addition, some merchants and consumers access the account regularly to check account balances, increasing the number of transactions and thereby any associated transaction fees. Lack of flexibility: Consumers are unable to shop around or stop dealing business with a particular merchant, resulting in reduced consumer choice and increased dependency on a particular merchant. Consumers are often unable to access cash from their account for other purposes, including emergencies or travel needs. Lack of financial skills: Most book up arrangements limit the ability for consumers to gain an understanding of managing and controlling their own money. In addition, some book up arrangements allow for family members or other people to book up against a consumer‟s account (which may or may not be based on relevant Indigenous cultural practices) leaving the consumer vulnerable to exploitation. Fraud: Access to the debit card and/or PIN can be attained by the merchant, employees of the merchant or third parties. Unrestricted access to customers‟ bank accounts and stolen cards can result in fraudulent transactions. Lack of consumer protection: Section 5.6 of the Electronic Funds Transfer Code of Conduct (“EFT Code”) sets out that a user is liable for unauthorised transactions if the user, amongst other things, voluntarily discloses one or more of the access codes to anyone, including a family member or friend, and thereby acts with extreme carelessness in failing to protect the security of all access codes. When a customer discloses their PIN to a merchant, in the instance of unauthorised transactions, it is likely that the customer would be liable for the unauthorised transactions. Therefore, consumers using book up lose the consumers protections associated with mainstream financial products. 2.2 What are the possible alternatives to Book Up? As well as restricting book up, the Government might consider promoting other alternatives which could serve as an alternative to book up. Some possible alternatives include: Direct funds transfers from Centrelink or bank account: Instead of merchants obtaining access to customers‟ debit card and/or PIN to cover purchases made by the customer, a direct funds transfer could be made where a portion of funds or welfare/government assistance payments is made available directly to the merchant to cover purchases. This approach would ensure that there is money available for other purchases in the customer‟s account and assist in limiting instances of excessive debt as well as enable the customer to retain their debit card and PIN and limit the instances of unnecessary transaction costs, or even unauthorised transactions. However, this option may have some of the problems associated with the current book up system, such as merchant record keeping, consumers being tied to one merchant and the risk of exploitative pricing, etc. AUSTRALIAN BANKERS’ ASSOCIATION INC. 3 Establishment of alternative banking facilities: To supplement existing banking services, local councils, post offices or rural transaction centres can provide a number of different services at the same location to minimise costs of services as well as provide face-to-face assistance to Indigenous and other customers. For example, GiroPOST provides personal banking services and access to credit or debit to make deposits or withdrawals. The ABA notes that ASIC has provided limited licensing relief to facilitate greater access to banking services for remote Indigenous communities in the Northern Territory and Queensland1. Establishment of Internet banking facilities in a store, post office, council or rural transaction centre: To supplement existing banking services, Internet banking located within an alternative location allowing consumers to check their account balances, pay bills and transfer funds would empower individuals to take responsibility for managing their own money as well as go to limiting fees that may be associated with checking balances or making small frequent withdrawals. The ABA does not believe that book up should be prohibited without considering the impact on remote and rural communities. The ABA believes that regulation of book up should seek to improve the financial well-being of Indigenous people. 2.3 What has the banking industry been doing to address Book up and Indigenous banking issues? The ABA and member banks have participated in a number of activities that focus on addressing book up and broader Indigenous banking issues, including: ABA co-hosted, with Reconciliation Australia, the “Industry Roundtable on Banking and Financial Services in Remote Communities” on 19 October 2004. Book up was one of the main areas discussed. ABA and member banks participated in ASIC‟s “Book Up Forum” in Alice Springs on 16-17 November 2005. The ABA has been liaising with ASIC on the distribution of its guide Dealing with Book Up launched on 15 December 2005. The ABA and ASIC are consulting on how the banking industry can further assist in distribution of materials about book up to regional, rural and remote communities, particularly Indigenous communities. ABA participates in the Northern Territory Government‟s “Indigenous Economic Development Taskforce”. Key initiatives of the Taskforce include identifying opportunities for developing Indigenous communities‟ business capabilities and individual home ownership. ABA participates in the “National Indigenous Consumer Strategy” launched on 1 September 20052. 1 ASIC Class Order [CO 05/844]: Licensing and disclosure relief for certain community representatives in remote communities. 2 Objectives of the strategy are to: improve indigenous consumers’ knowledge of their rights and obligations under consumer protection laws and achieve greater Indigenous access to consumer protection programs; improve the behaviour of traders, through education and compliance activity, to reduce detriment experienced by indigenous consumers; and promote effective engagement and partnership between consumer protection agencies, indigenous organisations, business and other government agencies to improve consumer outcomes for indigenous people. AUSTRALIAN BANKERS’ ASSOCIATION INC. 4 ABA and member banks participate in the “Indigenous Banking Reference Group”. The ABA is co-chair of the “Financial Literacy Working Group” and a member of the “Banking & Financial Services Working Group”. This initiative is part of Reconciliation Australia‟s “National Indigenous Money Management Agenda”3. ABA is working closely with the Federal Government on a number of initiatives, including the Treasury‟s “Financial Literacy Foundation” and the Department of Families, Community Services and Indigenous Affair‟s “Financial Well-Being Taskforce”. ABA is chair of the “Indigenous Banking Working Group”, which brings together member banks to discuss emerging Indigenous banking issues. In addition, ABA member banks have undertaken a number of initiatives aimed at eliminating poor book up practices. 2.3.1 Merchant agreements ABA member banks with a presence in the Northern Territory have agreed to adopt a consistent industry approach to addressing the contractual relationship that the bank maintains with traders and business owners utilising EFTPOS facilities. Specifically, ABA member banks have agreed to include a clause or clauses within their merchant agreements dealing with conduct associated with book-up. The wording and precise scope of these clauses differs among banks, but at a minimum, all participating ABA member bank merchant agreements will prohibit merchants requesting a PIN from their customers. At the time of writing, three member banks have already amended their existing and new merchant agreements to contain such a clause. Other banks are currently in the process of amending their existing and new merchant agreements. One major bank is due to complete amending all merchant agreements by July 2006. Another is due to complete all merchant agreements by September 2006. Member banks have, or will, communicate with merchants in advance of the amendment. The amendment to merchant agreements can encourage improved book up arrangements by merchants. Depending on the nature of a breach of the terms and conditions of a merchant agreement, there can be a number of consequences, including chargeback of transaction(s) to merchants or suspension of EFTPOS facilities. Where steps are not taken by the merchant to change the offending behaviour, this may ultimately result in termination of the merchant agreement and removal of the EFTPOS facility. However, this result may not be in the best interests of the remote and rural community, as the facility may provide convenient access to cash, and therefore alternative measures that can be taken against unscrupulous merchants, such as legal proceedings for violations of fair trading laws, would be preferable. The ABA notes that there are limitations with „policing‟ book up practices through merchant agreements. Where a bank is made aware that a merchant is requesting that customers make available their PIN, such as via customer complaint, the bank can initiate action to prevent the practice as a breach of the merchant agreement. However, the ability of a bank to investigate and prove an alleged breach of the terms and conditions of the merchant agreement may be limited without the support of government and regulators. 3 Objectives of the project are to: improve the financial literacy skills for Indigenous people; improve access to face to face banking services for remote customers; develop means of access to appropriate money management products for Indigenous people; and build a strong commitment from relevant agencies and organisations to progress these objectives. AUSTRALIAN BANKERS’ ASSOCIATION INC. 5 The ABA and member banks have worked closely with ASIC on introducing the amendment to merchant agreements. ASIC has provided the ABA and member banks with some key messages to ensure that factual and consistent information regarding why the banks have been asked to assist the government and regulators with addressing book up practices can be contained in communications with merchants4. All major banks will have in place amended merchant agreements before the introduction of any mandatory code. The amendment to merchant agreements gives effect to one of the recommendations contained in the National Indigenous Consumer Strategy. 2.3.2 Member banks programs At the time of writing, ABA member banks already have in place a number of programs that focus on providing financial literacy training and financial inclusion programs to Indigenous communities, including: “Family income management” (FIM) project in Cape York focuses on working with Indigenous families to develop a better understanding of how to effectively manage income to achieve improved living standards for all the family and the benefits of budgeting and saving (Department of Families, Community Services and Indigenous Affairs, Centrelink and community representatives, Westpac). “Financial First Steps” training materials and workshop developed for young adults in basic money management that has been delivered to CDEP participants and other communities across Australia. Specific materials have been piloted in remote Indigenous communities of Northern Territory and North Queensland (Westpac). “MoneyBusiness” project in Katherine, Tennant Creek, Galiwin‟ku, Niguiu, Kununurra and Geraldton is a community based money management skills and savings program including financial literacy workshops and training on topics relevant to the individual community (Department of Families, Community Services and Indigenous Affairs, ANZ). “Saver Plus” financial literacy and matched savings program designed to encourage and support people on low incomes to save for their children‟s education – to be rolled out as part of the “MoneyBusiness” program in 2006 (ANZ in association with Brotherhood of St Laurence, Berry Street Victoria, the Benevolent Society, The Smith Family). “Traditional Credit Union” partnership provides a project manager to work with TCU to provide TCU staff in Milingimbi and Ngukurr with training in financial literacy skills (Traditional Credit Union, ANZ). “Manage your income, Manage your life” is a pilot project initiated by Indigenous Australians in Western NSW that aims to train and resource Indigenous communities in financial management skills (Caritas, Centacare, Commonwealth Bank of Australia). “Commonwealth Bank Foundation” has awarded a number of financial literacy and e-learning grants to Indigenous community schools to assist primary and secondary students to develop financial literacy and technology skills (Commonwealth Bank of Australia). 4 See Attachment 1 for “Summary of ASIC Position on Book Up”. AUSTRALIAN BANKERS’ ASSOCIATION INC. 6 “Indigenous Partnership” program with the Queensland Government and the Torres Strait Regional Authority (TSRA) provides assistance to local business initiatives. The program provides assistance to Indigenous people to improve understanding of building business capacities as well as capabilities in accessing and managing finance (National Australia Bank). “No Interest Loans Scheme” and “Step Up Low Interest Loan” micro-credit program offers people on low incomes opportunities to gain access to small loans to purchase household assets (e.g. whitegoods). The programs also include financial literacy skills training (Good Shepherd Youth and Family Service, National Australia Bank). The major banks also have Indigenous employment, traineeship and scholarship programs providing opportunities for Indigenous people. 3. Options for regulating Book Up 3.1 Increase public awareness and education Option: Abandon the voluntary code while increasing education and public awareness of the disadvantages of book up, and in particular, the handover of debit cards and PINs and blank withdrawal forms. The ABA and our member banks are strongly committed to improving the financial literacy skills of all Australians. In particular, member banks have a number of programs that seek to improve the money management skills of Indigenous people and increase access to banking products and services by Indigenous communities. Financial literacy plays a significant role in addressing poor book up practices and broader issues with Indigenous accessibility to banking products and services. Financial literacy will assist consumers better protect their interests and understand the financial system. The benefits of improved financial literacy for Indigenous communities are well-informed consumers, greater personal savings, improved management of debt and a reduction in the likelihood of excessive debt or periods of financial hardship, decreased need for welfare or government assistance and increased personal economic security. Strategies for improving financial literacy skills should target those sectors of the community with the lowest levels of financial literacy, including Indigenous communities. In addition, the banking industry strongly advocates the safe use of debit cards and PINs as not only a requirement of the terms and conditions under which a bank provides a debit card to a customer, but also as a necessary aspect of being able to participate in the financial system. The ABA is currently working with ASIC on the distribution of its guide Dealing with Book Up. The ABA and ASIC are consulting on how the banking industry can further assist in distribution of materials about book up to regional, rural and remote communities, particularly Indigenous communities. Therefore, the ABA believes that raising awareness of the disadvantages of book up should form part of a consumer education program specifically delivered to Indigenous communities. It is our member banks‟ experience that partnership approaches; involving the Government, Indigenous representatives and the banks; delivers better results in improving financial literacy in Indigenous communities. The ABA also believes that educating merchants in advance of any legislative or regulatory strategy is vital to the success of promoting good book up practices. Merchants need to understand the implications for their business, make any necessary changes to their processes and notify their customers of any change to, or withdrawal of, book up arrangements. AUSTRALIAN BANKERS’ ASSOCIATION INC. 7 The ABA considers that a public awareness and education program is vital to the success of any legislative or regulatory measure to address book-up, and is important in transforming the behaviour of merchants and communities which have come to rely on the book-up system. 3.2 Introduce an improved voluntary code Option: Introduce an improved voluntary code, with the contents of that code to be agreed between the Office of Consumer and Business Affairs, ASIC and the ACCC. In response to a number of customer complaints regarding the book up practices adopted by the Alawa store in Darwin, a voluntary code has been entered into between the store owners and the Commissioner of Consumer Affairs. This voluntary code has subsequently been adopted by the store owners of the Bucking Bull Burger Bar in Katherine. The voluntary code does not seek to prohibit the store owners from holding the customer‟s debit card and PIN, but instead: Requires the store owners to maintain accurate records Ensures that customers are provided with full disclosure and access to their accounts Restricts access to book up to the customer and only other persons nominated in writing Obliges the store owner to keep cards and PINs secure, and Provides indemnity by the store owner in favour of the customer if there are any unauthorised transactions while it is in the custody of the store. The ABA believes that, in the instance of poor book up practices by unscrupulous traders and business owners, a voluntary code may not achieve the intended results of improving the management of book up arrangements. Therefore, the ABA considers that a mandatory code imposing restrictions on the behaviours of merchants is an appropriate mechanism for regulating book up practices (see below). 3.3 Amend merchant agreements Option: Seek the support of the major trading banks to take action against traders who hold cards and PINs in breach of those amended agreements in place between banks and traders regulating the use of EFTPOS. As mentioned above, ABA member banks have agreed to include clauses in their merchant agreements which, at the very least, will prohibit merchants requesting a PIN from their customers. Some member banks have chosen to include a wider prohibition, prohibiting not only the request of a PIN, but also the retention of a PIN, regardless of how it came into the merchant‟s possession. ABA member banks have not prohibited the retention of a debit card, as to do so would effectively abolish all book up practices, having unintended consequences for Indigenous communities that maintain good book up arrangements. The ABA believes that amending merchant agreements will go some way in eliminating poor book up practices by unscrupulous traders and business owners, as they should not have access to the PIN and thereby should be unable to access the customer‟s account without the customer or a person authorised by the customer. Where a bank is made aware that a merchant is violating the terms and conditions of the merchant agreement, such as through a customer complaint, the bank can then initiate action against the merchant. However, the government and regulators should be aware that „policing‟ book-up through enforcement of merchant terms and conditions can not be the sole solution. Banks will be unable to take action for breach of the terms and conditions without some form of proof or complaint against the merchant. AUSTRALIAN BANKERS’ ASSOCIATION INC. 8 Therefore, the ABA considers that amending merchant agreements should be made in conjunction with other measures. It is necessary for the Northern Territory Government to introduce additional mechanisms for regulating book up and the behaviours of merchants, such as through a mandatory code and legislative amendment. This also highlights the importance of consumer education in raising awareness of poor book-up practices and encouraging consumers to make a complaint if they are the victim of prohibited behaviour. 3.4 Amend the law Option: Amend the Trade Practices Act 1974, and the Consumer Affairs and Fair Trading Act to either specifically outlaw the practice of retaining debit cards and PINs, or to deem that it constitutes unconscionable conduct. The States and Territories have all adopted a uniform Consumer Credit Code (UCCC) which requires traders and business owners to comply with particular disclosure and record keeping requirements. However, the UCCC does not apply in certain circumstances: No charge for the provision of credit Amount of credit is less than $50 Credit is offered for a period of less than 62 days Therefore, the UCCC may not apply to some book up practices. The Commonwealth, States and Territories have legislation that prohibits traders and business owners from acting in an unconscionable manner. However, without adequate evidence, such as complaints from customers, records of purchases, etc, it has proven difficult under the current laws to bring a successful case against an unscrupulous trader or business owner maintaining a book up arrangement. The ABA believes that it is essential that effective provisions exist in the law to prohibit practices that exploit customers, particularly more vulnerable customers such as recipients of welfare and government assistance and people with low levels of English and literacy skills. Therefore, the ABA recommends that the Ministerial Council on Consumer Affairs (MCCA) pursue legislative amendment to give greater clarity to provisions of unconscionable conduct. The ABA encourages the Northern Territory Government to influence the (MCCA). 3.5 Adopt a mandatory code Options: Adopt regulations under the Consumer Affairs and Fair Trading Act to introduce a mandatory code to regulate the provision of credit by traders. As mentioned above, the ABA considers that a mandatory code governing book up practices and the behaviours of merchants would be an effective mechanism for regulating book up. The Code, in addition to the terms of the existing voluntary code, should clearly set out that store owners must: Clearly display the prices of goods on the shelf or the goods themselves (and ideally on the shelf and the goods) Charge goods at the same price available to other debit cardholders not using book up arrangements AUSTRALIAN BANKERS’ ASSOCIATION INC. 9 Provide the customer with an itemised receipt of their purchases for their records, and Keep records of book up accounts and make records available to customers or authorities upon request. In addition, the mandatory code should contain a prohibition restricting merchants from requesting and/or retaining a customers‟ PIN or other password or code that may enable access to a customer‟s account. However, there should not be an explicit prohibition on retaining a customers‟ debit card where the customer has willingly provided the debit card as security for access to the book up arrangement. The Code should not prohibit merchants from retaining a customers‟ debit card where the customer has voluntarily provided the card as security for participating in a book up arrangement. If the Code was to prohibit merchants from retaining a customers‟ debit card and PIN, this would in effect abolish book up. A Code should also contain provision for a transition period, say 3 months, to allow merchants to make any necessary process changes and to manage their customers‟ expectations. The ABA believes that this approach has a number of advantages: Customers would have some protection from unauthorised transactions, including checking of balances, as the merchant would not have access to the customer‟s PIN, resulting in less opportunity for unnecessary transaction costs Merchants would have clear guidance on how to maintain good book up arrangements, resulting in improved book up practices; or alternatively, merchants that feel pressured to provide book up would have the support to withdraw book up arrangements Poor book up practices would be reduced or eliminated Customers would have access to short-term credit and the convenience of book up when needed; however the worst of the risk posed by poor book up practices would be eliminated, and Merchants that breach the law would be held accountable against clearly established legal requirements, resulting in improved regulatory outcomes against unscrupulous merchants. While enforcement of the Code will be difficult, particularly in remote communities, the ABA believes that the Northern Territory Government should ensure compliance with the Code. Compliance with the Code can be enhanced by increasing public awareness by educating merchants and consumers as to their rights and responsibilities. The ABA is currently working with ASIC on distribution of information on book up practices to the most affected areas and communities. The ABA also considers that concerns with book up practices may not simply be isolated to the Northern Territory. Therefore, it would be reasonable for other States to consider how best to reduce instances of poor book up practices. AUSTRALIAN BANKERS’ ASSOCIATION INC. 10 4. Conclusion The ABA considers that no regulation of book up is undesirable, as it exposes consumers, particularly vulnerable consumers, to unscrupulous traders and business owners. While book up can provide some consumers with convenient shot-term credit, poor book up practices can expose consumers to risk of fraud, theft, „unsafe‟ debt and liability for unauthorised transactions. The ABA and member banks have not directly received complaints regarding book up for their customers; however, we understand that book up has been identified as a risk to consumers by the Government and consumer and welfare groups. Furthermore, it is in the interests of the banking industry that EFTPOS facilities are managed in a responsible manner and consumers do not forfeit their consumer protections. The ABA considers that there are a number of strategies that can be taken in conjunction to address concerns with poor book up practices: Mandatory code: The ABA supports the implementation of regulations that restrict book up practices and behaviours of merchants via a mandatory code restricting the retention of a customer‟s PIN and imposing certain disclosure and operational practices on merchants that maintain book up arrangements. However, any legislative or regulatory strategy that addresses book up must acknowledge that for some Indigenous communities, book up provides a convenient source of credit when no other alternative is available. Strategies that prohibit book up could result in substantial hardship for some Indigenous communities. Merchant agreements: The ABA supports a consistent restriction in merchant agreements of banks and other merchant facility providers restricting merchants from requesting a customers‟ PIN. Financial literacy training: The ABA supports strategies seeking to improve the financial literacy skills of Indigenous people so they can make informed money management decisions. Australian Bankers‟ Association 20 March 2006 AUSTRALIAN BANKERS’ ASSOCIATION INC. 11 Attachment 1: Summary of ASIC Position on Book Up ASIC Australian Securities & Investments Commission SUMMARY FOR ABA OF ASIC POSITION ON BOOK UP - MARCH 2006 On 11 March 2002 ASIC assumed Commonwealth responsibility for consumer protection where firms lend money to consumers, investors and small businesses. This includes the provision of informal credit by a merchant to a consumer to purchase goods or services from that merchant, commonly known as 'book up' or 'book down'. In March 2002 ASIC released a report into book up, Book up: some consumer problems which focussed on the particular practice of stores and merchants taking possession of Aboriginal consumers' debit cards and/or Personal Identification Numbers (PINs) as a form of security for book up. The report highlighted a number of disadvantages associated with this form of book up, including a lack of transparency and consumer choice and a risk of fraud. Equally though ASIC's report found that book up had some advantages and was relied upon by a large number of Aboriginal consumers in remote and rural parts of Australia as an easily accessible form of credit to help them manage money in between payments. It is ASIC's view that the problems of book up will not be resolved by one solution alone or by one agency. ASIC has adopted a partnership approach and is working closely with other Government regulators, the banks and other financial institutions, Aboriginal communities and consumer groups to develop solutions to the problems for Aboriginal consumers associated with book up. On 16 and 17 November 2005 ASIC and the NT Government brought together the key players at a forum on book up in Alice Springs. At the forum the NT Government released a discussion paper which had the support of ASIC. It proposed a number of regulatory options for book up in the Northern Territory. The option favoured by the NT Government and ASIC is a mandatory code under the Consumer Affairs and Fair Trading Act (NT) which sets minimum standards for book up, including a ban on the retention of PINs by a merchant. It is ASIC's view that the retention of PINs by a merchant can result in significant disadvantages for a consumer and it also undermines the consumer protection provisions of the Electronic Funds Transfer Code of Conduct and consumer confidence in the EFTPOS system. ASIC acknowledges that book up has some advantages and is managed well for the benefit of consumers in certain cases, and has therefore not recommended a complete ban on book up. A ban on the retention of PINs would not completely prohibit book up. A merchant would still be able to retain a customers debit card (without the PIN) as security, or where the consumer preferred to leave the card with the merchant for safekeeping. AUSTRALIAN BANKERS’ ASSOCIATION INC. 12 A mandatory code would need to be supported by an education and compliance program, as well as a transition period to allow merchants and consumers to find alternatives. As an initial step, on 15 December 2005 ASIC released Dealing with book up: a guide. The guide is an information resource for government and community agencies providing assistance to Indigenous communities dealing with book up. It provides information on how communities can develop their own responses to book up. ASIC has also worked with the major banks and other financial institutions to develop solutions to book up. ASIC welcomes the news by the Australian Bankers' Association and the Credit Union Industry Association that some of their members have changed, or are in the process of changing their EFTPOS merchant agreement contracts to prohibit merchants requesting and/or retaining PINs from consumers. This approach is consistent with and supports ASIC's views and the contents of the proposed mandatory code. A ban on the retention of PINs is also recommended as best practice in the National Indigenous Consumer Strategy, to which ASIC is a signatory. Further information on ASIC and book up can be found on www.fido.gov.au.