The Australian Banking Association has given the Banking Code of Practice a shake up in response to the final report of the royal commission.
Commissioner Kenneth Hayne gave 29 recommendations that applied to the banks and the ABA is committed to taking forward seven with the remaining to be implemented by the regulators and government.
The new code, approved by ASIC last year, introduces a range of new measures that will make banking easier to understand and will focus on the customer.
The code itself is enforceable through the courts and AFCA as it forms part of a customer’s contract with the bank.
The ABA supports and will implement in full the recommendation that banks ban informal overdrafts and dishonour fees on basic accounts.
Remote areas and customers with limited English will also receive more protections with ABA supporting the recommendation that banks will work with those customers and identify ways for them to undertake their banking.
Indigenous and Torres Strait Islander’s will also receive more protections with banks, following AUSTRAC’s guidance about their identification and verification.
The ABA also will introduce enforceable provisions of the code to be identified and agreed upon by ASIC. They will also amend the code to end charging default interest to those affected by natural disasters.
The only recommendation yet to be acted on by ABA is Commissioner Hayne’s recommendation that the definition of ‘small business’ to be changed.
“The ABA has not yet reached a view on this issue and believes more consideration needs to be given to the issue by regulators, the ABA and the small business community, particularly the change from Total Credit Exposure to per loan facility,” they said.
ABA’s chief executive Anna Bligh said the industry had concerns that the small business recommendation would have a material impact to credit for small business owners.
However Ms Bligh said the association was taking the report seriously and using it as a roadmap for the future.
“The Royal Commission Final Report is the industry’s roadmap for earning back the trust of the Australian people.
“The industry has taken the report and is acting with urgency to ensure lasting reform occurs without delay,” she said.
Ms Bligh said consumer protections were important to get right and these changes would increase the accessibility of banks.
“The Royal Commission highlighted the need for the Banking Code of Practice to be strengthened to increase protections for small business and increase the accessibility of services for customers in remote areas or with limited English.
“In addition to the changes to the Code, banks will also deliver greater assistance to farmers through clearer and improved practices when assisting farmers with distressed loans,” Ms Bligh said.
The new code is to be implemented as soon as possible, said Ms Bligh, and would deliver a better industry for all Australians.
“This work will build upon the new Code, approved by ASIC in July last year, which delivers a better banking experience for Australian customers,” she said.
Eliot Hastie is a journalist at Momentum Media, writing primarily for its wealth and financial services platforms.
Eliot joined the team in 2018 having previously written on Real Estate Business with Momentum Media as well.
Eliot graduated from the University of Westminster, UK with a Bachelor of Arts (Journalism).
You can email him on: [email protected]
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