The Association has welcomed the release of the final report on the review of the Code of Banking Practice conducted by independent consultant Philip Khoury, which was conducted over approximately seven months.
The final report contains 99 recommendations, after Mr Khoury consulted with a range of stakeholders, including consumer and community groups, small business and farming representatives, banks, regulators, ombudsmen, government representative and politicians.
Commenting on the review, ABA executive director of retail policy Diane Tate said that it is clear the Code needs to change to meet the evolving needs of customers and the wider community.
The changes proposed for customers by the review include:
• Plain-English language so that Australians can better understand their banking rights and responsibilities
• An easier way to cancel credit cards or reduce the credit limit, and a commitment by banks when offering cards to assess someone’s ability to pay the full credit limit in a reasonable time period
• A new dedicated section for small businesses, and a commitment by banks to simplify terms and conditions and give more notice when loan contracts change
• Increased help for people experiencing, or at risk of, financial difficulty, so they can take control of their finances
Ms Tate agreed that “significant changes” will be made to the Code to raise standards in banking and deliver on the industry’s commitment to improvement.
“Of the 99 recommendations, the banking industry supports 61 in full. There are 29 recommendations that we support in principle or in part, and the remaining nine we either need more time to consider, or are not in a position to adopt,” Ms Tate said.
“The industry recognises it is important for customers that we make these changes as soon as possible. We are aiming to have a new Code redrafted by the end of the year. This timeframe is ambitious, but we are determined to deliver change fast, while taking care to get it right.
“While the Code has legal effect through subscribing banks’ terms and conditions, we have heard we need to do more to give customers confidence in the Code. That’s why the ABA will work with the Australian Securities & Investments Commission on approving the Code, and on giving greater powers to the Code Compliance Monitoring Committee.”
Ms Tate highlighted that it will take some time for banks to make any necessary changes to adopt the new code, which at this stage is anticipated to be a transition period of 12 months.
[Related: Banks commit to further industry reforms]