The new code will commence from February 28, 2025
The Australian Securities & Investments Commission (ASIC) has approved a new version of the Australian Banking Association’s (ABA) Banking Code of Practice, which includes enhanced protections.
After extensive consultation led by ASIC, the ABA addressed critical gaps flagged by stakeholders, resulting in strengthened standards and the retention of key protections for consumers and small businesses.
ASIC previously approved the code, as a whole, in December 2019, and most recently approved updates in January 2021.
The newly updated code, which will commence on Feb. 28, 2025, expanded the definition of a small business from $3 million in aggregate borrowings to $5 million, making another 10,000 businesses eligible; improved inclusivity and accessibility for customers, including interpreter services; included new provisions for deceased estates, broader definitions of financial difficulty, and enhanced protections for loan guarantors.
ASIC ensured key code protections remained intact, including the requirement for consumer borrowers and their guarantors to be treated with the care and skill of a diligent and prudent banker.
Key provisions regarding consumer complaints handling and robust oversight by the Banking Code Compliance Committee have also been retained. A new provision commits subscribing banks to be bound by their obligations under the Banking Code Compliance Committee Charter.
ASIC chair Joe Longo (pictured above left) highlighted the improvements in the new code but noted that it is not the final step in customer-focused banking.
“Banks have a significant impact on our lives, and Australians and ASIC rightly have high expectations of them,” Longo said. “ASIC’s review has been focused on ensuring this code can make a difference in the day-to- day practice of the banking sector and through that, good customer outcomes.”
The new code follows an independent review in 2021, public consultation by ASIC from November 2023 to January 2024, and engagement with the ABA, consumer groups, and other stakeholders.
Meanwhile, the ABA has welcomed ASIC’s approval of the updated code, with chief executive Anna Bligh (pictured above right) stating that it would drive better banking outcomes for customers.
“Banks are focused on delivering the highest standards of customer service to all Australians, and the code is a fundamental part of ensuring this happens,” Bligh said. “This updated rule book for banks raises the bar even higher with enhanced protections for customers. It will ultimately drive even better outcomes for customers.
“This is a banking code with teeth. Customers can continue to take complaints to the Australian Financial Complaints Authority or the courts who can then take strong action when necessary. The Banking Code Compliance Committee will also continue to independently monitor compliance by banks.”
Bligh also noted that the new code strikes a balance between creating new protections and simplifying the code for both bank staff and customers.
“We have taken the opportunity to remove some provisions that are now covered by legislation,” she said.
“Now that ASIC has approved the new code, ABA banks large and small, will begin making changes to their systems to meet the new requirements as well as training staff ahead of it going live.”
The code will be available on the ABA’s website soon.
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