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Changes made to Banking Code of Practice

The ACCC has authorised official changes to the ABA’s Banking Code of Practice to better align with recommendations made by commissioner Kenneth Hayne.

The Australian Competition and Consumer Commission (ACCC) has authorised changes to the Australian Banking Association’s (ABA) Banking Code of Practice to align with its recommendations to better fulfil recommendations from the banking royal commission.

The changes strengthen protections for vulnerable and low-income customers, including those who speak limited English, the elderly, and farmers affected by drought.

As authorised by the ACCC, the updated Banking Code now prohibits informal overdrafts on low or no-fee basic accounts held by eligible low-income customers, unless agreed to by the customer, and also prohibits overdrawn fees and dishonour fees.


The changes, which were recommended by the ACCC and have now been approved by the body, include:  

  • Banning charging default interest on distressed agricultural loans (in areas affected by drought or other natural disasters)
  • Providing inclusive and accessible banking services to those with limited English and those living in remote areas  
  • Giving concession card holders access to accounts with no overdraft and dishonour fees 
  • Making the features of a basic, low and no-fee bank account for low-income earners uniform across the industry (in addition to the recommendations of the final report). 

Under the new code, basic bank account products must have no minimum deposit requirements, must provide free direct debit facilities, must provide users access to a debit card at no extra cost, and allow for free unlimited domestic transaction for eligible customers.

Official changes require formal approval from the Australian Securities Investments Commission (ASIC) and are likely to be implemented by early next year.

The move comes after the ACCC suggested that the ABA’s initial proposals did not go far enough in protecting these customers. As such, the ABA revised these proposals, which have now been approved.

ACCC deputy chair Delia Rickard said the new Banking Code, with the ACCC’s conditions, are being put in place to address the concerns for low-income earners raised by the Hayne royal commission and strengthen the new banking code.

Ms Rickard also said the changes are aimed at addressing a “significant source of harm” to farmers affected by natural disasters and drought.

“We had concerns that the original proposed code did not fully reflect the spirit of the Hayne royal commission’s recommendations about basic accounts,” she said.

“For example, low-income customers could have been charged interest rates of up to 20 per cent on overdrawn amounts despite not having agreed to take on an overdraft facility.”

Under the conditions, ABA member banks must either not charge interest, or refund any interest charged, on informal overdrafts on basic accounts held by eligible low-income customers if the customer has not agreed to an overdraft facility. 

Banks must also proactively identify customers who may be eligible for basic accounts.  

Further, following the changes, the ABA must report to the ACCC on several matters; including any changes to the number of banks offering basic bank accounts, how often informal overdrafts are occurring without the customer’s agreement, and the steps that banks have taken to contact existing customers who might be eligible for a basic account. 

These reports will reportedly be made publicly available.

“The ACCC wants to see improved outcomes for low-income customers and farmers, and we also want the new Banking Code to deliver public benefits and address the Hayne royal commission’s recommendations,” Ms Rickard concluded.

[Related: ACCC calls for stronger protections in banking code]

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