New code raises bar for customer-owned banks

The bar has been raised for customer-owned banks, with a new code of practice in place from Oct. 31, the Customer-Owned Banking Association (COBA) has confirmed.

The updated code seeks to increase the level of support provided to vulnerable customers, such as those experiencing elder abuse, domestic violence and/or disability. It also establishes obligations for more inclusive banking products, expanded lending obligations, and guarantor protections.

Replacing the 2018 version, the code of practice underwent an independent review by former ASIC executive general manager Phil Khoury, COBA said. Following consideration by the code review advisory committee, it was adopted by the COBA Board.

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COBA CEO Michael Lawrence (pictured above) said developing technology, new purchasing options and the rising cost of living all indicate the importance of a focus on protecting vulnerable consumers.

Customer-owned banks serve more than 5 million Australians and are committed to ensuring their customers have access to services built on a deep appreciation of vulnerabilities or financial challenges, he said.

“Our new 2022 code of practice considers what changing consumer behavior means for customers’ financial health,” Lawrence said. “[It] provides significantly expanded protections for vulnerable customers, including commitments to accessible banking services for older customers and First Nations Peoples, and additional care in circumstances involving disability, elder abuse, or domestic violence.”

Lawrence thanked the various stakeholders involved in the review process, including consumer groups, regulators, the code compliance committee, consultants, and member banks.

Teachers Mutual Bank Limited CEO Steve James said the bank subscribes to code of practice because it believes it’s important to demonstrate the value the bank places on improving the financial wellbeing of its members, as it strives to be “a bank for good, for those who do good”.

Illawarra Credit Union CEO Anthony Perkiss said as an industry, customer-owned banks had listened to customers, who said they want a fairer banking experience. Adopting the new code of practice would help to reinforce and validate the bank’s commitment to customers, and the broader communities it serves, he said.

“These updates are incredibly timely and mean the needs of customers will continue to be at the forefront of all of our decisions, as they always have been,” Perkiss said.

Defence Bank CEO David Marshall said its members could feel confident in the knowledge that the team would deal with them fairly and honestly.

“We welcome the new code, which will only strengthen our focus on our members and their banking needs,” Marshall said.

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The code of practice 2022, available on the COBA website, includes guidance about inclusive banking services, additional commitments to small business customers for lending, safeguards for co-borrowers and loan guarantors, as well as support for customers experiencing financial difficulty.

Additional commitments to small business customers include a fair and reasonable approach to late or missed payments, under which at least 30 days’ notice is to be provided to borrowers to remedy the breach (except in specific situations, such as bankruptcy or voluntary administration).

Developed by COBA, the code of practice is a set of guidelines for customer-owned banking institutions, including mutual banks, credit unions and building societies.