In a first for the industry, retail banks in Australia will be required to sign up to the new Banking Code of Practice as a condition of membership to the Australian Banking Association.
The new Code, currently awaiting ASIC approval, has been completely rewritten and updated to better meet community standards and will be binding and enforceable.
CEO of the Australian Banking Association Anna Bligh said the new Code, now to become a requirement of ABA membership, was a significant ramp up of the industry’s efforts to improve conduct and culture.
“In the past it was up to each individual bank if they wanted to sign up however this new customer focussed Code will become compulsory for all ABA members with a retail presence,” Ms Bligh said.
“This new code will be binding, forming part of relevant customer contracts, enforceable by law and will be monitored by an independent body.
“Australians expect their banks to operate in an ethical and appropriate way when they apply for a credit card, home, small business loan or other financial product.
“While there is much work still to be done, Australia’s banks are serious about genuine reform which addresses conduct and culture, with the Banking Code of Practice a cornerstone of these efforts.
“The industry is committed to genuine reform which will rebuild trust with the Australian community, with the new Code an important step in the right direction.
“Once approved by ASIC, the Code will deliver changes across the board with plain English contracts for small business, no more unsolicited offers to increase credit card limits, greater transparency around fees and customers having an ability to cancel a card online – just to name a few,” she said.
Finalised and lodged with ASIC in December the new Code outlined important changes for individuals and small businesses, including:
Bank who have signed up are required to include in its contracts a statement that the Code applies, which in turn is a legally enforceable document. This new industry code will have the force of the law. There will be a 12 month implementation period for the Code once ASIC has given its approval.
In addition, an independent body, the Banking Code Compliance Committee (BCCC) will monitor and oversee compliance with the code. The committee has power to investigate breaches of the Code and apply sanctions if necessary.
Re-disseminated by The Asian Banker