Banking Code of Practice 2021 Review

The Australian Banking Association has released the final report of the 2021 Independent Review of the Australian Banking Association’s Banking Code of Practice.

The reviewer concluded that the Banking Code of Practice does not need a complete overhaul or rewrite, but consumer benefits and protections need to be strengthened and clarified.

The 116 recommendations include:

  • The commitment to compliance made more tangible for example by senior leadership in the banks sending a clear message to staff as to the importance of the Code to the bank.
  • It should be drafted with sufficient detail, either in the Code or related industry guidelines, to facilitate the implementation of the commitments by bank staff and allow consumer representatives help customers pursue their rights.
  • As the Code is the rule book for the banks there should be a separate consumer friendly and readily accessible document that highlights consumers have rights in their dealings with banks, along with indicating that the detail of their rights is in the Code as well as advising who can assist them in any dispute with their banks.
  • The Code should specifically refer to how all the provisions can be enforced.
  • A new commitment should be added to the Code for banks to take all reasonable steps to have in place the appropriate systems, processes, and programs to support an integrated approach to compliance.
  • The industry guidelines should be considered as Code related documents, and not as outside the Code and voluntary. Banks should take into account industry guidelines in assessing whether they are complying with Code commitments. If they are not following the best practice outlined in the guidelines, banks will have to demonstrate they are following comparable processes in meeting the commitments.
  • The ABA should assess the extent to which the Code may need to be changed in response to the introduction of the Mandatory Credit Reporting regime after completion of the Credit Reporting Code. This should include amending Clause 178(c) to make it clear that banks will tell customers what the impact on their credit report will be when they accept or refuse a hardship or collections arrangement.
  • Chapter 35 of the Code should reference that a customer has the right to remove a joint account from the Consumer Data Right and banks will be proactive identifying vulnerable customers and alerting them to this right.
  • In order to clarify the rights of customers, the Code should include the statement that if a customer suffers loss or damage because a bank contravenes the Design and Distribution Obligations, the customer may recover the loss or damage from the bank.
  • The Code should include a commitment that Buy Now Pay Later (BNPL) products issued by banks will be subject to credit checks and eligibility requirements to ensure the products are suitable for consumers.The Code should include a commitment that banks commit only to partner with BNPL providers that are members of ACFA and agree to meet ASIC guidance on dispute resolution.

The ABA says it will now consider the recommendations and begin to draft a new Code.

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David Jacobson

Author: David Jacobson
Principal, Bright Corporate Law
About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.

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