ACCC authorisation of changes to 2019 Banking Code of Practice

The ACCC has issued a final determination granting authorisation to proposed changes to the 2019 Banking Code of Practice for a period of five years from 1 March 2020, subject to a number of conditions.

The Australian Banking Association (ABA) requested authorisation of changes relating to informal overdrafts, dishonour fees, and default interest charged on loans secured by agricultural land. In addition, the ABA requested authorisation to prescribe certain minimum requirements relating to basic bank accounts (BBA).

The current Banking Code does not define the features of a BBA. The minimum features the ABA sought to mandate included no account keeping fees, free periodic statements, no minimum deposits, free direct debit facilities, access to a debit card at no extra cost and free unlimited domestic transactions.

The Basic Accounts Proposal will apply to customers who hold either a Commonwealth Seniors Health Card, a Health Care Card, or a Pensioner Concession Card (although Member Banks can choose to offer these features more broadly).

The ACCC determination conditions include:

  • ABA member banks must either not charge interest, or refund any interest charged, on informal overdrafts on basic accounts held by eligible low income customers if the customer has not agreed to an overdraft facility.
  • Banks must also proactively identify customers who may be eligible for basic accounts.
  • The ABA must also report to the ACCC on several matters including any changes to the number of banks offering basic bank accounts, how often informal overdrafts are occurring on basic accounts held by eligible customers without the customer’s agreement and the steps that banks have taken to contact existing customers who might be eligible for a basic account.
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