ASIC has approved an updated version of the Australian Banking Association’s Banking Code of Practice which will commence on 28 February 2025.

The Banking Code obligations form contractual promises between the bank and its customer and their guarantor.

The February 2025 Code retains existing protections from the March 2020 Code and contains additional provisions for individual and small business customers and their guarantors.

The changes in the February 2025 Code include:

• An updated definition of small business, which increases the upper limit of aggregate borrowings from $3 million to $5 million, resulting in a greater number of small businesses having protections under the Code;
• An updated conduct standard, committing subscribing banks to do all things necessary to ensure that banking services provided under the Code are provided efficiently, honestly and fairly. This is the same standard of behaviour that applies under subsection 912A(1)(a) of the Corporations Act and subsection 47(1)(a) of the National Consumer Credit Protection Act 2009;
• Clarified commitments for how subscribing banks will improve inclusivity and accessibility for customers including via interpreter services, National Relay Services or accessible information;
• Clarified commitments in relation to the administration of deceased estates. Subscribing banks commit to make available clear and accessible information about what a representative can do to manage a customer’s account in the event of their death and to make this information publicly available;
• An updated vulnerability definition, including explicitly recognising incarcerated persons as customers at risk of experiencing vulnerability;
• The financial difficulty definition has been amended to include customers who are likely or expecting to be unable to meet future repayments. It also includes more examples of financial difficulty causes;
• Subscribing banks commit to take reasonable steps to make sure a meeting is held with a prospective guarantor before taking a guarantee, and to discuss customer’s circumstances and reasonable alternatives to repay a guaranteed liability before selling a guarantor’s primary place of residence.

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