Australia’s bankers have attempted to address mounting community anger over repeated scandals by rewriting their code of conduct to include promises of simpler contracts with fewer conditions.
The changes to the existing Australian Banking Association code of conduct followed a demand from corporate regulator ASIC for a complete rewriting of the existing rules drawn up by the banks.
ASIC’s demand was made in response to mounting scandals over a range of bank products — including lax lending standards, failures to pay out on life insurance policies and charging for financial advice that was never delivered — and was made in 2015, even before the financial services royal commission commenced hearings earlier this year.
The current code, and its draft replacement, have been discussed at the commission, with ABA chief executive Anna Bligh called up to the stand in May.
Ms Bligh today said the two-year process to come up with new rules had been rigorous, with numerous changes being made to the original draft document to satisfy ASIC’s demands.
“The new code will introduce a range of new measures to make banking products easier to understand and more customer-focussed,” she said.
“It represents a stronger commitment to ethical behaviour, responsible lending, greater financial protection and increased transparency.
“Customers will see real tangible benefits, including more information about changes to their accounts, delay in offering add-on insurance products and simpler contracts, with fewer conditions for small business loans.”
The new code includes a dedicated section on small business lending for the first time.
Small business and agribusiness experts will also be brought in to assist the independent Banking Code Compliance Committee in areas of disagreement between the banks and customers.
ASIC has approved the new code, the first time the regulator has given the banks’ code a tick.
Banks will now have until July 2019 to comply with the new rules and update their policies, procedures and systems.