Learn more about the Banking Code of Practice
25 June 2020
The Australian Banking Association has made temporary changes to the Banking Code of Practice to reflect the fact that the COVID-19 pandemic may temporarily affect the provision of banking services.
These temporary changes have been approved by ASIC today, preserving the Code’s status as meeting the standards necessary for approval and, importantly, ensuring the code continues its recently enhanced customer protections.
The changes acknowledge that during the pandemic and its aftermath, banks are dealing with very high volumes of customers in distressed circumstances and operating in very uncertain economic conditions. Many customer solutions offered as part of the banks’ COVID-19 assistance are tailored, and require banks to ensure the right support to suit customer circumstances.
The two changes provide that:
- In certain circumstances banks may not always be able to meet the timelines for customer communication outlined in some provisions of the Banking Code of Practice
- A bank’s obligations when lending to small business customers, to engage in a fair, reasonable and ethical manner, and to exercise the care and skill of a diligent and prudent banker, will be informed by the circumstances and effects of COVID-19 generally.
These temporary changes will help continue the flow of credit to small and family businesses during current economic challenges, by recognising that the assessment of business loan applications presents unique challenges in this environment, including the difficulties in making predictions for matters such as the pace of economic recovery, and in assessing business’ ability to service loans.
The temporary changes also reflect that, in some limited circumstances, banks may not be able to comply with usual timing requirements specified in the Code. This change only applies to paragraphs 101(b)&(c), 102, 148, 164, 205, and 206.
Under the temporary changes, the substantive obligations of these paragraphs remain in place but non-compliance with the specified times will not constitute a breach of the Code, if banks are making good faith efforts to comply.
To ensure that customer remain fully informed of their rights to go to AFCA, the Special Note commits banks to informing customers of this within the usual timeframes.
All other parts of the Code, including time limits specified in paragraphs other than those listed above, continue to apply as usual.
Contact: ABA media 0475 741 007
Australian banks are supporting communities in Far North Queensland affected by Tropical Cyclone Niran.
“No customer is going to wake up the day after the 31st of March and find that there is some legal action being taken by their bank on their loan.”