The ABA says that after hundreds of hours of development and more than 50 meetings with banks and key stakeholders over the past nine months, the new Banking Code of Practice has been sent to ASIC for approval.
The Australian Bankers’ Association CEO, Anna Bligh, said this is a huge step for the industry which has voluntarily introduced a new simplified, customer focused code.
“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 customers,” she said.
“The industry has achieved the ambitious task of developing a new Code only nine months after receiving the final report from independent reviewer Mr Phil Khoury.
“The new Code has been broken into ten key parts, with four brand 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.
This includes a new deferred sales model for consumer credit insurance on credit cards, small business contracts written in plain English, and the right to close a credit card account online. In addition, customers will be notified before their introductory credit card interest free period expires, the banks will introduce ways to proactively identify customers who may be experiencing financial difficulty and implement better safety nets for guarantors.
“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.
“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.
The fact that the industry has accepted 96 of the 99 recommendations in some form is proof that banks are serious about change, and are currently undergoing the greatest level of reform seen in the sector in more than 20 years.
“Banks value their customers and the new Code is one more step towards providing better banking for all Australians,” Ms Bligh said.
The Code is the first industry code to be sent to ASIC for approval and was part of major industry initiatives announced in April 2016 to raise banking standards.
WHAT’S IN THE NEW CODE FOR YOU?
For individuals
- Customers will be informed when a bank reports any payment default on a loan to a credit reporting body, making it easier for customers to manage their finances.
- On request, customers will be provided with a list of direct debits and recurring payments made on accounts. This can go back as far as 13 months and can assist customers with managing their accounts, avoiding dishonour fees and with switching.
- Improved transparency around fee disclosure by telling customers, where practical, about transaction service fees immediately before they incur the fee, helping customers better manage their costs.
- Waiving or refunding statement fees for customers who do not have access to electronic statements.
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 that are written in plain English and are easier to understand.
- Improved communication and greater transparency by banks in the use of external property valuers, investigative accountants and insolvency practitioners.
For guarantors
- Ensuring that guarantors are making an informed decision after taking time to consider the guarantee documents. Guarantors, who have not received legal advice, will be required to wait three days before signing, which may help customers avoid financial abuse.
- Guarantors will be notified of changes to the borrower’s circumstances, including if they are experiencing financial difficulty.
