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In what it’s called a “major step to strengthen customer protections and maintain trust in the banking sector”, the Australian Banking Association (ABA) has submitted a proposed new banking code to the Australian Securities and Investment Commission (ASIC) for industry consultation.
According to the ABA, the banking code is a set of “enforceable rights and entitlements for bank customers that are over and above the law”.
The new code proposes added protections for customers such as:
- An expanded definition for small businesses for an additional 10,000 small-business customers to be protected under the code
- New obligations for banks to meet with customers with the intention of acting as a guarantor to help them understand their obligations before accepting a guarantee
- New definitions for “vulnerable customers” by acknowledging that anyone can become vulnerable at any time due to unforeseen life circumstances
- A commitment to refer or organise customers to free support services (AUSLAN or National Relay Services)
- More clarity on the types of support available to customers, such as financial difficulty options for small businesses
- A renewed section on inclusive and accessible banking that recognises banking services should be inclusive of people of diverse gender identities or sexual orientations
ABA chief executive Anna Bligh said: “The banking code is an important part of Australia’s regulatory framework, it gives customers significant extra safeguards.
“The current Banking Code is the only Code in the financial services sector with ASIC approval and the industry is determined to maintain these high standards.
“For the first time, the ABA will prepare a new ‘Customer Guide’ outlining banking protections available under Australian law and how consumers can access and enforce those protections along with the Code.”
Along with these extra protections, the ABA has streamlined and simplified the code where possible.
The code was last updated in 2019 and there are now 1,175 pages of additional legislation and regulation applying to the banking sector.
“The ABA has taken this opportunity to strike the right balance between creating new protections and removing parts of the Code that were either already in law or have been recently superseded by new legislation,” Ms Bligh said.
The ABA expects the new code to be put in place in early 2024.
Industry head welcomes the FAR
Assistant Treasurer and Minister for Financial Services Stephen Jones MP recently confirmed that Parliament has passed the Labor government’s legislation to implement the Financial Accountability Regime, in a move welcomed by the Financial Brokers Association of Australia (FBAA).
Managing director of the FBAA, Peter White AM, said the association supports the FAR as “being the extension to what was the past Banking Executive Accountability Regime (BEAR)”.
[RELATED: 'With great power comes great responsibility'; FBAA welcomes FAR]
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