In a statement released on Friday, ASIC said it had approved a range of variations to the banking code of practice via legislative instrument, including the extension of a “COVID-19 Special Note” contained within the code until 1 September 2021.
According to the legislative instrument, the special note allows banks to “advise [customers] of the possibility of delays to the usual required notifications during the complaints process” as a result of COVID-19 business disruption.
Additionally, banks would be required to “inform [customers] within 45 days of a complaint (or such other time as specified for the relevant dispute in ASIC’s Regulatory Guide 165), of [their] rights to apply for external dispute resolution” if the bank had not resolved the complaint.
Further, the special note acknowledged difficulties for banks in assessing customers’ suitability for small business loans, due to the unpredictability of economic activity during the pandemic.
“In these circumstances, our obligation to engage with you in a fair, reasonable and ethical manner, and to exercise the care and skill of a diligent and prudent banker, will necessarily be informed by these matters and the effects of COVID-19 generally,” the note stated.
Variations to the code approved by ASIC also included changes to the definitions of “banking services” and “small business” to address previous anomalies that had excluded certain types of small businesses from falling under the code.
Additionally, the variations included new provisions around how banks dealt with customer advocates, stating that a bank may choose to deal directly with a customer rather than with an advocate if they “reasonably believe the representative is not acting in [the customer’s best interests]”.
The regulator also said “more comprehensive changes” would be made to the code as part of the Australian Banking Association’s triennial review of the code provisions later in the year.
A key focus for the review would be formulating the code in such a way that it could become legally enforceable under new legislation passed in response to the royal commission late last year.
