In 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 ASIC for industry consultation.
The Banking Code is a set of enforceable rights and entitlements for bank customers that are over and above the law.
"The Banking Code is an important part of Australia's regulatory framework, it gives customers significant extra safeguards," said Anna Bligh, CEO of the ABA.
"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."
The proposed new Code adds new and increased protections for customers including:
- an expanded definition for small business which means an additional 10,000 small business customers will have the protections of the Code
- new obligations for banks to meet with customers intending to act as guarantor to help them understand their obligations before accepting a guarantee
- a new vulnerable customer definition, acknowledging anyone can become vulnerable at any time in their life due to a life changing circumstance such as losing a partner or a job or becoming ill
- a new commitment to organise or refer customers to free support services such as interpreters, AUSLAN and National Relay Services
- greater clarity on the types of support available to all customers, including financial difficulty options for small businesses
- an updated section on inclusive and accessible banking which recognises banking services should be inclusive of people with diverse sexual orientations and gender identities.
"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," said Anna Bligh.
"Banks are committed to using simpler language for customers to understand how the Code protects them."
In addition to the increased protections for customers, the ABA has taken the opportunity to streamline and simplify the Code where possible.
"Since the last Code was updated in 2019 there is 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between creating new protections and removing parts of the Code that were either already in law or have been recently superseded by new legislation," said ABA CEO Anna Bligh.
The updated Code follows extensive stakeholder consultation overseen by independent reviewer, Mike Callaghan. ASIC will now undertake its own consultation with relevant industry stakeholders as part of their approval process.
The ABA anticipates the new Code will be in place in early 2024.
