As a prerequisite for membership, the Australian Bankers’ Association (ABA) will require banks to be signatories of the new Banking Code of Practice, which is pending approval of the new code from the Australian Securities and Investments Commission (ASIC).
Binding and enforceable, the new code sets out the banking industry’s key commitments and obligations to customers on standards of practice, disclosure and principles of conduct for their banking services.
The updated code outlines changes for both individuals and small businesses, including:
- plain English contracts
- ending unsolicited offers of credit card increases
- the mandated ability for customers to cancel a credit card online
- improved transparency around fees by telling customers about service fees immediately before they occur
When entering into contractual arrangements, signatories will be required to include a legally binding statement which notes that the code is applicable.
Following the new code’s approval, banks will have 12 months to implement the reform.
Further, an independent body, the Banking Code Compliance Committee (BCCC), will be charged with monitoring and overseeing compliance. The BCCC has been given authority to investigate breaches and impose sanctions.
ABA CEO Anna Bligh claimed that the new code is a significant industry reform designed to improve culture and conduct.
“In the past, it was up to each individual bank if they wanted to sign up. However, this new, customer-focused code will become compulsory for all ABA members with a retail presence,” Ms Bligh said.
“This new code will be binding, forming part of relevant customer contracts, enforceable by law and will be monitored by an independent body.
“Australians expect their banks to operate in an ethical and appropriate way when they apply for a credit card, home, small business loan or other financial product.”
Ms Bligh believes that the reform is a sign of the industry’s willingness to improve its standards.
“While there is much work still to be done, Australia’s banks are serious about genuine reform which addresses conduct and culture, with the Banking Code of Practice a cornerstone of these efforts,” the CEO added.
“The industry is committed to genuine reform which will rebuild trust with the Australian community, with the new code an important step in the right direction.”
[Related: Banks agree to new code of practice]
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Annie Kane is the editor of The Adviser and Mortgage Business.
As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts.