In its response to the 2021 Independent Banking Code of Practice Review, the Australian Banking Association (ABA) today announced that consumers and small businesses would receive greater protections under changes to be made to the Banking Code of Practice ("the Code").
The Independent Banking Code of Practice Review was undertaken in 2021 by Mr Mike Callaghan AM PSM to enhance and strengthen the operation of the Code. It made 116 recommendations following consultation with stakeholders including consumer groups, government, regulators and the banking industry.
The Banking Code of Practice is subscribed to by all retail banking ABA members and sets out enforceable standards that customers, small businesses and their guarantors can expect from Australian banks.
"Since the Banking Code was first introduced in 1993, the process to independently review the Code has continued to deliver improvements and meet the changing needs of customers," ABA Chief Executive Anna Bligh said.
"The Review continues this work and banks will take on even greater responsibility to deliver enhanced standards of customer service under an updated Code. We now look forward to a period of close consultation with key stakeholders including consumer groups, government, regulators and the banking industry," Ms Bligh said.
In responding to the recommendations from the review banks have agreed to:
- An updated small business definition which will offer protection to an additional 10,000 small business customers;*
- Clear statements outlining the Code's overall objective, customer's rights and how to enforce them;
- An updated vulnerable customer definition to better recognise that anyone can be vulnerable at any time. This would also clarify the type of support available to all customers, including financial difficulty options for small businesses or those needing access to external support services such as interpreters and financial counselling.
The ABA has not supported the adoption of recommendations where government is consulting on potential legislation or policy reform, for example, Buy Now Pay Later products, or where the recommendations unnecessarily duplicate the law and / or regulatory guidelines.
The inclusion of entire ABA Industry Guidelines within the Banking Code is also not supported as these are best practice guidance rather than specific Code obligations.
The ABA is also removing some regulatory duplication from the Banking Code which will make the document more accessible and easier to understand. As part of this review the ABA will update the ABA Branch Closure Protocol in accordance with the recommendations of the Regional Banking Taskforce.
"It is important that we continue to review and update the Code to ensure it remains relevant for today's modern banking industry and delivers a high standard of banking services expected by the community. I would like to thank Mr Callaghan and the many individuals and organisations who made submissions to this important Review process," Ms Bligh said.
