The new code of practice was first announced as part of major industry initiatives put forth in April 2016 to raise banking standards.
Earlier this year, the process of developing a new code began, after the Independent Review of the Code of Banking Practice was released by reviewer Phil Koury.
Since then, the banking industry has reportedly spent “hundreds of hours of development and more than 50 meetings with banks and key stakeholders” to develop the code, which aims to provide more protections and transparency for customers.
While the full code has not yet been publicly released, some details of its contents have been revealed.
The industry has accepted 96 of the 99 recommendations “in some form”, which the Australian Bankers’ Association (ABA) said was “proof that banks are serious about change”.
The ABA added that the sector is “currently undergoing the greatest level of reform seen in more than 20 years”.
Some of the changes to the code include:
- Notification when a bank reports any payment default on a loan to a credit reporting body, which aims to “make it easier for customers to manage their finances”.
- Access to a list of direct debits and recurring payments made on accounts, which could “assist customers with managing their accounts, avoiding dishonour fees, and with switching”.
- The ability to cancel credit cards online.
- A deferred sales model for consumer credit insurance on credit cards.
- Notification of transaction services fees before they are incurred, which aims to “help customers better manage their costs”.
- Notification when introductory credit card interest-free periods expire.
- Refunds or waivers of statement fees for those who do not have access to electronic statements.
- No more unsolicited offers to increase credit card limits.
- A three-day waiting period for signatures from guarantors that have not received legal advice, which aims to help avoid financial abuse.
- Notification when a borrower’s circumstances change, including if they are experiencing financial difficulty.
For small businesses
- Small business customers will be provided with a longer notice period about changes to loan conditions or a bank’s decision on whether it will continue to provide the loan facility, “which will help businesses with future planning”.
- Simplified loan contracts will be written in “plain English” and become “easier to understand”.
- Improved communication and “greater transparency” in the use of external property valuers, investigative accountants and insolvency practitioners.
‘Introducing higher standards for how banks serve their customers’
Speaking of the new code, Australian Bankers’ Association CEO Anna Bligh commented: “Banks are committed to change and the new code is stronger, broader and written in simple-to-understand language.
“It has been completely rewritten to better meet community expectations and service the needs of customer[s].”
Ms Bligh revealed that the code has been categorised into 10 key parts, with four new sections, including one dedicated to small businesses and another related to making banking more available for customers and easier to access.
“The remaining six sections represent a complete restructure of important parts of the current code,” Ms Bligh said.
Some of the changes that Australians can expect in the new code are more transparency around products and services and a more prominent commitment to ethical behaviour.
“The new code means we are making banking easier by making changes to processes, providing customers with more info and introducing higher standards for how banks serve their customers.
“This new set of rules and behaviours will go a long way in addressing the expectations that Australians have of their banks.”
Concluding, the ABA CEO said: “Banks most certainly do not underestimate the challenge ahead of them and will continue to make the necessary changes and improvements that their customers expect.
“Banks value their customers and the new code is one more step towards providing better banking for all Australians.”
Annie Kane is the editor of Mortgage Business.
As well as writing news and features on the Australian mortgage market, financial regulation, fintechs and the wider lending market – Annie is also a regular contributor to the Mortgage Business Uncut podcast.
Before joining Momentum Media in 2016, Annie wrote for a range of business and consumer titles, including The Guardian (Australia), BBC Music Magazine, Elle (Australia), BBC Countryfile, BBC Homes & Antiques, and Resource magazine.