Certain scandals in the Australian banking sector imposed the need for modification of the Australian banking Code. Changes in the Code serve the purpose to protect customers and offer better services as well as to bring back the trust in the banking sector.
What is Bank Code or Code of Banking Practice?
The Code of Banking Practice serves as a framework for defining standards related to service delivery, customers’ rights and standards for resolving customer disputes. Moreover, The Code of Banking Practice defines the obligations of the banking industry to customers. It should be noted that the Code is not a legislation.
According to the Australian bankers Association, individual and small business customers are entitled to the following rights under the framework of the Code of Banking Practice:
- disclosure of fees and charges and other terms and conditions;
- changes to terms and conditions and fees and charges;
- disclosure of general information about banking services;
- privacy and confidentiality;
- statements of account;
- copies of documents;
- direct debits;
- chargebacks on credit and debit cards;
- debt collection;
- complaints handling;
- important disclosure and other rights for guarantors;
- experiencing financial difficulty with your credit facility; and
- special consideration for older persons, people with disabilities and customers in remote Indigenous communities.
List of banks adhering to the standards prescribed by the Code of Banking Practice is available here.
Changes in the Australian Banking Code refer to changes in credit cards, bank offers, certain fees, protection of loan guarantors, loan information, etc. The following changes have been made to the Australian banking Code:
- Customer have the opportunity to cancel credit cards online;
- Information about the expiration introductory interest rate period;
- Removal of the practice of sending unsolicited offers regarding increase in credit card limits;
- Elimination of fees for customers without access to electronic statements;
- Paying interest only on the remaining balance on their credit card, instead of paying interest on the full purchase amount;
- Increase in the notice period regarding changes in loan conditions;
- Informing guarantors about changes related to borrower’s circumstances;
- In order for loan guarantors to be protected against financial abuse, they will have to wait for three days before signing if the guarantor didn’t get legal advice;
- Customers can obtain a list of their direct debts and recurring payment for the last 13 months;
The new changes to the Australian banking code serve the purpose to increase protection of individual customer and small business customers. In addition, these changes will ensure that customers will not be subject to unethical practices.