Publications / Finance

8 Feb 13
The Revised Code of Banking Practice - 2013

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Following an independent review and consultation process which was completed in December 2008 the Australian Bankers’ Association Inc. (ABA) has issued a revised Code of Banking Practice which amends and replaces the 2004 Code of Banking Practice.
The revised Code of Banking Practice and Code Compliance Monitoring Committee Mandate (Code) commenced on 1 February 2013.  Subscribing financial institutions (Subscribers) have 12 months to update their systems, processes, documentation and to train staff to ensure compliance with the Code by 1 February 2014.

The Code applies to all banking services and guarantees (and some pre-existing banking services and guarantees which will be picked up in the transitional rules) provided by Subscribers to their current and prospective individual or small business customers and their individual guarantors.

Like the previous Code of Banking Practice, each Subscriber is contractually bound and obliged to adhere to the minimum standards of good banking practice as set out in the Code.  Accordingly, any breach of the Code will constitute a breach of contract between the Subscriber and its customer.  This obligation is additional to, and does not remove the requirement for Subscribers to also comply with, Australian consumer laws and any other rights a customer might have under Federal, State and Territory laws (including pursuant to the National Consumer Credit Protection Act 2009 (Cth) incorporating the National Credit Code).

The Code introduces changes to the previous Code of Banking Practice, including:

  1. a revised disclosure regime in respect of information that Subscribers will make available to their customers including:
    1. a requirement to provide clear and up-to-date information on fees, charges, interest, payment dates, statement dates and the process for cancelling or altering banking and financial services accounts;
    2. in the case of customers holding a concession card, a requirement to provide information about no or low fee accounts; 
    3. in the case of small business customers, a requirement to give 10 days notice before varying the customer’s terms and conditions if those variations may be materially adverse to that small business customer; and
    4. in the case of other customers with special needs (for example, older customers, low income customers or those with disabilities) specific information tailored to their needs and specially trained staff to assist these customers.
  2. more robust financial hardship provisions which establish a regime requiring Subscribers to be more proactive in the way they deal with customers who may be in financial difficulty including:
    1. ensuring appropriate systems are in place and staff are adequately trained to enable the Subscriber to respond promptly to requests for assistance; and
    2. a commitment not to combine accounts or assign debt;
  3. new provisions for dealing with customers in remote indigenous communities; and
  4. an enhanced system of dispute resolution and monitoring and sanctioning for breaches of the Code by a Subscriber (including clarification of the roles of external bodies the Code Compliance Monitoring Committee and the Financial Services Ombudsman).

A copy of the Code can be accessed from the ABA website:

Focus covers legal and technical issues in a general way. It is not designed to express opinions on specific cases. Focus is intended for information purposes only and should not be regarded as legal advice. Further advice should be obtained before taking action on any issue dealt with in this publication.

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