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The Australian Securities and Investments Commission (ASIC) has opened its consultation on the Australian Banking Association’s (ABA) proposed alterations to its Banking Code of Practice (the Code). This has marked the first time ASIC has undertaken public consultation prior to making a decision on approving the Code.
The ABA submitted the proposal to ASIC in September 2023 in what was called a “major step to strengthen customer protections and maintain trust in the banking sector”.
According to ASIC, it is seeking to guarantee that the Code continues to “provide real benefits to consumers, small businesses, and subscribing banks before deciding whether to grant final approval”.
ASIC is focused on gaining feedback and insights on the following key issues:
• Whether the proposed Code imposes obligations on subscribers that are beyond those required by the law and, in doing so, addresses key potential consumer harms.
• Whether the proposed Code provides for effective administrative systems for monitoring compliance and whether the obligations are capable of being enforced.
• Whether any Code review recommendations that the ABA has not supported should be included in the proposed Code.
• Whether the recommendations accepted by the ABA are appropriately reflected in the proposed Code and proposed Charter.
• Whether the proposed Code strikes an appropriate balance between simplifying the Code and minimising regulatory duplication on the one hand and promoting consumer awareness of protections applicable to their banking relationship on the other.
• The role of industry guidelines.
New code to protect customers
The ABA looks to introduce added protections for customers such as an expanded definition for small businesses for an additional 10,000 small-business customers to be protected under the code and new obligations for banks to meet with customers with the intention of acting as a guarantor to help them understand their obligations before accepting a guarantee.
Speaking at the time of the submission, ABA chief executive Anna Bligh said the banking code is “an important part of Australia’s regulatory framework” and “gives customers significant extra safeguards”.
“The current Banking Code is the only Code in the financial services sector with ASIC approval and the industry is determined to maintain these high standards,” Ms Bligh said.
“For the first time, the ABA will prepare a new ‘Customer Guide’ outlining banking protections available under Australian law and how consumers can access and enforce those protections along with the Code.”
[RELATED: ABA submits new banking code proposal]