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.
