A new Banking Code of Practice will see changes to the definition of a small business and expand financial difficulty provisions.
The Australian Securities & Investments Commission (ASIC) approved the new code, which it says includes enhancements to key protections.
ASIC Chair Joe Longo said the new version of the Australian Banking Association’s (ABA) Banking Code of Practice would come into effect on February 28, next year.
“Following a period of extensive ASIC-led consultation, the ABA agreed to address critical gaps flagged by stakeholders, resulting in a strengthening of standards and a retention of key protections for consumers and small businesses,” Mr Longo said.
He said the enhancements included expanding the definition of a small business from $3 million in aggregate borrowings to $5 million, meaning another 10,000 businesses would be eligible.
The updated code also includes improved inclusivity and accessibility for customers, including via interpreter services, and new provisions for deceased estates.
It also broadens the definition of financial difficulty and provides enhanced protections for loan guarantors.
Mr Longo said ASIC ensured there was no watering down of current key Code protections, including the requirement “to act with the care and skill of a diligent and prudent banker for consumer borrowers and their guarantors”.
“Important provisions regarding the handling of consumer complaints and ensuring the robust oversight of the Code by the Banking Code Compliance Committee have also been retained, including by a new provision that commits subscribing banks to be bound by their obligations under the Banking Code Compliance Committee Charter.”
Mr Longo said while there were several key improvements in the new Code, it was not the final word in customer-focussed banking.
“Banks have a significant impact on our lives and Australians and ASIC rightly have high expectations of them,” Mr Longo said.
“ASIC’s review has been focused on ensuring this Code can make a difference in the day-to-day practice of the banking sector and through that, good customer outcomes.”
