The signatories of the Australian Banking Association (ABA) will now have to comply with the new code that increases and enshrines customer protections and introduces tough new penalties for breaches.
As of now, banks can no longer offer unsolicited credit card limit increases, charge commissions on lenders mortgage insurance or sell insurance with credit cards and personal loans at the point of sale.
Banks must now offer low-fee or no-fee accounts to low-income customers, have a three-day grace period on all guarantees and actively promote low-fee and no-fee accounts.
Institutions will also have to provide reminders when introductory offers on credit cards end, offer simpler and fairer loan contracts for small business, and provide customers a list of direct debits and recurring payments to make it easier to switch banks.
ABA chief executive Anna Bligh said customers should see a change to products and services immediately.
“We’ve completely rewritten the rule book for Australia’s banks. The Banking Code of Practice has strong protections for customers, serious consequences for breaches and strong independent enforcement.
“Banks understand they need to change their behaviour and this new rule book represents an important step in earning back the trust of the Australian public,” she said.
There are close to 200 clauses in the new code and includes better protection for whistleblowers, more oversight of mortgage brokers and dedicated customer advocates in banks to improve situations for customers.
Current signatories of the ABA’s code include the big four banks plus the likes of Macquarie, AMP, Suncorp, ING and BOQ.
Tasmanian bank My State Bank has also recently signed the code of practice, making it the only bank headquartered in Tasmania to do so.
Its managing director and chief executive Melos Sulicich said the revised code was part of a broad industry movement to improve banking services.
“Through the revised code, fairness, efficiency and honesty are the guiding principles for how customers should be treated, and regulators will be holding the industry to account in adhering to these principles.
Industry response
Westpac Group’s chief executive, Brian Hartzer, welcomed the commencement of the practice and said it was a big step towards rebuilding trust.
“This is a new, stronger banking code for a new era. The banking code sets out the industry’s key commitments and obligations to our customers delivering stronger protections for our customers,” he said.
CBA’s chief executive, Matt Comyn, said the bank was committed to the principles outlined, which will improve standards for all industry participants.
“This new code supports the progress we are making to do what is right for our customers and earn back trust,” he said.
Shayne Elliott, chief executive of ANZ, said the code sets down in plain language the standards of practice that consumers and customers can expect from the banks.
“While there is more work for the industry to do in rebuilding trust with the community, this new code is an important and significant step towards achieving that goal,” said Mr Elliott.
NAB’s chief executive, Philip Chronican, said this was the strongest code yet and that NAB was ready to meet its expectations.
“It delivers enhanced rights and protections for our banking customers, small businesses and their guarantors and will play a vital role in helping banks like NAB rebuild trust with our customers and the communities in which we operate,” Mr Chronican said.
NAB also said it would remove 50 fees and abolish its “introducer” payments program. It had also extended the code protections to its small-business loans up to $5 million.
