The Australian Bankers’ Association (ABA) released its response to the independent review of the Code of Banking Practice on Tuesday, generally supporting the vast majority of recommendations.
Of the 99 recommendations, the banking industry said it supported 61 in full. There are 29 recommendations that it supports in principle or in part, and the remaining nine it either needs more time to consider or will not support.
“There are also a number of related Federal Government reviews underway which we need to take into account before we can finalise our work on some of the recommendations,” said ABA Executive Director – Retail Policy, Diane Tate.
“By accepting the vast majority of recommendations, banks are demonstrating they are taking action to change as well as being honest about the things which are more complex to resolve.
“In most cases where the industry does not support a recommendation, we have put forward an alternative that addresses the underlying intent of the recommendation.”
Some of the easy wins for customers that the ABA was happy to support include:
- Plain-English language so that Australians can better understand their banking rights and responsibilities.
- An easier way to cancel credit cards or reduce the credit limit, and a commitment by banks when offering cards to assess someone’s ability to pay the full credit limit in a reasonable time period.
- A new dedicated section for small businesses, and a commitment by banks to simplify terms and conditions and give more notice when loan contracts change.
- Increased help for people experiencing, or at risk of, financial difficulty, so they can take control of their finances.
Tate said the banking industry was committed to the independent review of the Code which is now complete.
“Mr Phil Khoury, the independent reviewer, consulted widely as part of his review and it is clear the Code needs to change to meet the evolving needs of customers and the wider community,” she said.
“The new Code will have a clear commitment to ethical behaviour by banks, in a similar way that the Banking and Finance Oath demonstrates a personal commitment to high ethical standards.
“The Code will be redrafted in plain English so it is easier to read and our customers can better understand banks’ commitments to them, as well as their rights and responsibilities.”
Tate said the industry would work with stakeholders and other interested parties to redraft the Code.
“The industry recognises it is important for customers that we make these changes as soon as possible. We are aiming to have a new Code redrafted by the end of the year. This timeframe is ambitious, but we are determined to deliver change fast, while taking care to get it right,” she said.
“While the Code has legal effect through subscribing banks’ terms and conditions, we have heard we need to do more to give customers confidence in the Code. That’s why the ABA will work with the Australian Securities and Investments Commission on approving the Code, and on giving greater powers to the Code Compliance Monitoring Committee.
“Banks will need time to make any necessary changes to adopt the new Code. At this stage we anticipate a transition period of 12 months, but this will be revisited once we have a new Code."
The AFA has committed to publishing quarterly progress updates on the redraft and implementation of the Code.