In response to recommendations from the Hayne Royal Commission’s final report, the Banking Code of Practice will be revamped to provide better protections for Australian banking customers.
Australians with ‘basic’ bank accounts, customers living in remote areas or with limited English and farmers are all set to benefit from the changes implemented by the Australian Banking Association (ABA).
Some of the
- Ban informal overdrafts on basic bank accounts
- Abolish dishonour fees on basic bank accounts
- Provide that banks will work with customers in remote areas or who have limited English to identify ways for them to undertake their banking
‘Basic’ bank accounts are transaction accounts that provide essential banking services at a lower
The royal commission revealed instances of customers on Centrelink benefits with these basic bank accounts unwittingly being charged up to $60 a month in informal overdraft fees.
Informal overdrafts occur when a bank allows a customer to withdraw more than what they have left in the account, without prior agreement with the customer.
Banks can charge fees or interest on these overdrafts, which are essentially debts.
Dishonour fees, which are also being abolished on basic accounts, are the fees charged when a direct debit, automatic or cheque payment is made from an account but the payment is declined because of insufficient funds.
The change to make banks work with remotely-located and non-English speaking customers to identify better ways to undertake their banking was another strong recommendation from Commissioner Kenneth Hayne.
In his final report, Mr Hayne said large entities such as banks apply the same policies and procedures wherever they can.
“But, as the Commission’s inquiries showed, not all Australians can always resort to those standard policies and procedures,” he said.
“Not all Australians have the same access to telephone or internet banking. Not all Australians can ‘step into the nearest branch’ to sort out some issue that has emerged.
“Not all Australians have English as a first language or are as adept in using the English language as others. ”
Industry acting with urgency: ABA CEO
ABA CEO and former Queensland premier Anna Bligh said the updates would create a stronger code for customers.
“The Royal Commission Final Report is the industry’s roadmap for earning back the trust of the Australian people,” Ms Bligh said.
“The industry has taken the report and is acting with urgency to ensure lasting reform occurs without delay.
“The Royal Commission highlighted the need for the Banking Code of Practice to be strengthened to increase protections for small business and increase the accessibility of services for customers in remote areas or with limited English.
“In addition to the changes to the Code, banks will also deliver greater assistance to farmers through clearer and improved practices when assisting farmers with distressed loans.”
The Banking Code forms a part of a customer’s contract with their bank, so it is enforceable by law through the courts and the Australian Financial Complaints Authority.
Ms Bligh said the banking industry will be implementing the changes to the Code “as soon as possible”.
“This work will build upon the new Code, approved by ASIC in July last year, which delivers a better banking experience for Australian customers,” she said.
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