The Australian Banker's Association's (the ABA's) new Banking Code of Practice (the Code), has been sent to the Australian Securities and Investments Commission (ASIC) for approval last Tuesday (19 December 2017). It has been reported that the Code has been rewritten, following the independent review released early 2016 by consultant Phil Khoury. The review that was very critical of the existing code, describing it as a "complex tapestry of obligations" that was overly legalistic.
The ABA's website describes the Code as ". . . the banking industry's customer charter on best banking practice standards". The Code is intended to set out the banking industry's "key commitments and obligations to customers" on:
As of January 2014 the ABA's website lists 14 banks as having adopted the Code - see who they are.
In July 2016, an independent review of the 2013 Code was started by Phil Khoury, Managing Director of Cameron Ralph Pty Ltd. Mr Khoury presented his final report to the ABA in February 2017. The final report made 99 recommendations which can be viewedalong with the report. The ABA's response to the final report in March 2017 is also available .
Some of the key the changes to the code are:
The ABC News reports the changes as being a rush by the Banks to rebuild trust in "the scandal-plagued sector" reporting the ABA will also push its members to make unpopular transaction fees more transparent and for small business contracts to be written in plain English.
The ABA chief executive, Anna Bligh, said that the new code which is to come into effect in 2018 will introduce "... higher ethical standards and greater fee transparency", saying also:
It should also be noted that the provisions in the new code will be "legally binding as part of contracts with customers", with implementation of the new code to be monitored by an independent "Banking Code of Compliance Committee". This is unlike the previous codes which were voluntary, but able to be enforced when members of the ABA agreed to sign up to them.
ABA chief executive Anna Bligh is also reported as saying that, "...the fact that members accepted 96 of the 99 recommendations [of the Khoury Review] proves that banks are serious about change and committed to the greatest reform in more than 20 years".
As indicated above, the new code was sent to the ASIC for approval last Tuesday. In addition to any changes ASIC may require, it is reported that the new code will also be examined by the Hayne Royal Commission into Banking as part of its proceedings. The Commission's terms of reference specifically ask it to consider the adequacy of self-regulation by industry codes, and it is quite likely that the banks maybe required to make further changes to the code.
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