In the wake of the damage from the banking royal commission, Australian banks have tried to win back public support by re-drafting their code of conduct
The new code follows a demand from corporate regulator the Australian Securities and Investments Commission for a complete rewrite of the existing rules drawn up by the banks.
It will provide better protection for small business borrowers and it expands the reach and impact of legal protections against unfair contract terms. It prohibits banks from imposing a range of potentially unfair and one-sided terms in lending contracts for small businesses that borrow up to $3 million. This will cover 92-97 per cent of businesses in Australia.
The code also introduces:
- A commitment to look after vulnerable customers, customers on low incomes and Indigenous customers
- Protections around the sale of products such as credit insurance
- Greater protection for co-guarantors of loans
- Enhanced processes for assisting customers in financial difficulty and processes for resolving complaints.
The CEO of the Australian Banking Association Anna Bligh said the revamped code would make banking products easier to understand and more customer focussed.
“It represents a stronger commitment to ethical behaviour, responsible lending, greater financial protection and increased transparency,” Ms Bligh said.
“Banks value their customers and the new code is a big step towards providing better banking for all Australians.
“Customers will see real tangible benefits, including more information about changes to their accounts, delay in offering on add-on insurance products and simpler contracts, with fewer conditions for small business loans,”
The Hayne commission however will continue and will submit an interim report no later than 30 September 2018. It will provide a final report by 1 February 2019 and ASIC says it may review its approval of the Code in light of the Royal Commission findings.