The Australian Banking Association (ABA) has introduced a new Banking Code of Practice, which promises to provide additional safeguards for customers that have not yet been set in law, including new provisions offering greater protection for small businesses, guarantors and vulnerable customers.
The Banking Code update has also expanded the definition for small businesses, which will consequently provide protections to an additional 10,000 small businesses across the country, as well as expanding the section on support available to customers facing financial difficulty.
ABA CEO Anna Bligh said that the updates will provide more “teeth” to the Banking Code and raises the bar even higher with enhanced protections for customers.
“This new rule book is about ensuring that when customers interact with their bank, they are getting the highest level of service and care,” Bligh said. “It sets new standards and clearer expectations for service, integrity and accountability across the entire banking industry.”
More clarity around how banks should be supporting customers
The ABA stated that the updated Banking Code will provide greater clarity on how banks will support customers facing financial difficulty, including arrangements that can be put in place to help them get back on their feet.
“Banks are always looking for ways to continuously improve the banking experience for all customers, and this Code is one of the ways to achieve this. It strikes the right balance between creating new protections and simplifying parts to ensure it is easier to understand and apply – not only for bank staff, but for customers and their representatives too,” said Bligh.
Council of Small Business Organisations Australia CEO Luke Achterstraat also said that by revamping the Code an additional 10,000 small businesses will have higher standards, service and protections provided to them.
“Strong, harmonious and trusting relationships between financial institutions and small businesses is particularly important in a challenging environment,” Achterstraat said. “Small businesses are time-poor, are experiencing economic fatigue so these enhanced protections could not come sooner.”
Requirements to accommodate for ESL, financially-stretched customers
Another aspect of the new Code that has been praised is the requirement for bankers to provide further special accommodations to customers, such as translation services or options for businesses facing financial difficulty.
“Given that one-third of Australian small business owners are born overseas, additional referral support to services such as interpreters is a practical and welcome initiative,” said Achterstraat.
South East Community Links Head of Financial Wellbeing Rachna Madaan Bowman also welcomed the increased focus on ensuring customers can access interpreters when interacting with their bank.
“Everyone has a relationship with money and having access to independent interpreters will give people an opportunity to engage with equality, dignity, and respect in a system that is so meaningful for their everyday lives,” Madaan Bowman said. “For customers where English isn’t their first language – ensuring they can understand what their rights are will allow them to make more informed decisions because the message for them will be in language.”
In addition to the new small business definition, the new Banking Code details the new obligations for banks to meet with customers intending to act as guarantor to help them understand their obligations before accepting a guarantee; a new vulnerable customer definition, acknowledging anyone can become vulnerable at any time; new provisions for managing deceased estates; a new commitment to organise or refer customers to free support services such as interpreters, AUSLAN and National Relay Services; greater clarity on the types of support available to all customers, including financial difficulty options for small businesses; and an updated section on inclusive and accessible banking which recognises banking services should be inclusive of people with diverse sexual orientations.
The updates to the Banking Code was developed through extensive consultation with stakeholders, consumer advocates, small business representatives and regulators, with approval from the Australian Securities and Investments Commission (ASIC).
