The Australian Bankers’ Association (ABA) has released a revised Code of Banking Practice. The Code is contractually binding on subscribing banks and sets out the minimum standards banks have agreed to follow when dealing with personal and small business customers.
The revised Code responds to the Independent Reviewer’ Final Report on the 2004 Code which was released on 16 December 2008.
The Code gives individual and small business customers commitments in respect of matters such as:
- disclosure of fees and charges and other terms and conditions;
- notice of changes to terms and conditions and fees and charges;
- privacy and confidentiality;
- statements of account;
- the right to copies of documents;
- direct debits;
- chargebacks on credit and debit cards;
- debt collection;
- complaints handling;
- rights of guarantors.
Changes to the 2004 Code include:
- New financial hardship provisions to assist people who may be in financial difficulty in meeting their repayments;
- A commitment not to combine accounts or assign debt when a bank is actively considering whether a customer is in financial difficulty with a Credit Code regulated loan;
- A commitment to provide information about no or low fee accounts to customers if the bank becomes aware the customer has a Commonwealth concession card, such as a Seniors Health Card, Health Care Card or Pensioner Concession Card;
- Clarification that chargeback rights exist for disputed transactions on relevant debit cards, including debits under recurrent payment arrangements;
- New provisions for customers in remote Indigenous communities, including making relevant information accessible, providing assistance to customers to meet identification requirements and appropriately training relevant staff to be culturally aware;
- A commitment that banks will only sell debts to third parties that agree to comply with the ‘Debt Collection Guideline: for Collectors and Creditors’;
- A commitment to send customers with a mortgage, on a primary place of residence or residential investment property, an annual reminder about their insurance obligations; and
- recognising the needs of older persons and customers with a disability.
The new Code covers an individual or small business that is an actual or prospective customer involved in retail banking transactions and their guarantors. Any small business that has less than 20 (full time or equivalent) people is covered, as well as a goods manufacturing business that has less than 100 (full time or equivalent) people unless the banking service is provided in connection with a larger business.
Banks have committed to a new notice requirement for small businesses to give at least 10 days notice before making any materially adverse changes to a small business customer’s terms and conditions (other than variations of fees and interest calculations).
The Code will not apply to a “wholesale client” within the meaning of Chapter 7 of the Corporations Act 2001.
The revised Code will apply to a bank when the bank adopts the Code. All current subscribers to the 2004 version of the Code will need to adopt the 2013 Code by 1 February 2014.
An independent compliance monitoring body, Code Compliance Monitoring Committee (CCMC) has been set up to investigate possible breaches of the Code.
However, the CCMC cannot determine claims for financial loss. Such claims will be referred to the Financial Ombudsman Service.
