Royal Commission Code changes given green light

The Australian Securities and Investments Commission (ASIC) has given the final approval for a new version of the Banking Code of Practice 2019 that implements recommendations of the Royal Commission.

The
approval comes after the Australian Competition and Consumer Commission (ACCC) gave
authorisation in November this year for the Royal Commission changes to the
Code to proceed.

The Final
Report of the Royal Commission into Misconduct in the Banking, Superannuation
and Financial Services Industry recommended key changes be made to the
industry’s Code.

Changes recommended,
and now approved by the ACCC and ASIC include:

  • Ceasing default interest on agricultural loans while farms
    are affected by drought or natural disaster
  • Providing inclusive and accessible banking services to
    those with limited English and those living in remote areas
  • Removing informal overdraft and dishonour fees on basic, low fee
    or no fee accounts for concession card holders

In addition to the Royal Commission recommendations the industry
sought approval on making the features of basic bank accounts uniform across
the industry.

Improvements have also been made to the provisions in the Code on
lending to Small Business, including extending protections to guarantors of
small business loans and clarifying the restrictions on non-monetary defaults
on small business loans, responding to points raised by stakeholders.

CEO of the
Australian Banking Association Anna Bligh said that the approvals of the ACCC
and ASIC meant that banks were now able to implement the changes requested by
Commissioner Hayne in his Final Report.

“The
industry has worked tirelessly to implement the recommendations of Commissioner
Hayne and ensure these changes received the necessary regulatory approvals so
they can be implemented by 1 March 2020,” Ms Bligh said.

“These
changes will benefit customers and mean every bank will have a standard basic, low
fee or no fee account for low income earners and there’ll be a ban on charging default
interest on distressed agricultural loans for farmers subject to droughts and
natural disasters.

“These changes to the Code come on top of a number the
industry has made as a result of the Royal Commission including ending fees to
customers when no service has been provided and improving the way banks manage
deceased estates,” she said.

Geoff Fader, Chair, Tasmanian Rural Financial
Counselling, said “the changes to the Code
demonstrate that banks do understand the variable and tough conditions that
farmers face and are willing to work with farmers to get through these
difficult times.”

“The banning of default interest during drought or natural disaster gives greater protections to farm businesses and ensures a standard practice across banks. This gives farmers greater certainty during what is a very stressful time for them,” he said.

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