Codes of Practice and financial difficulty

Financial institutions who subscribe to a Code of Practice have obligations to consumers experiencing financial difficulty. The independent committees who monitor the Codes urge consumers to also be aware of these obligations.

In 2018, financial difficulty was a particular focus of the committees, especially in the banking sphere where an inquiry found that customer requests for assistance had almost doubled since 2012.

The Banking Code Compliance Monitoring Committee (CCMC) used data from banks and consumer advocates to compile Part 1 of its Financial Difficulty Report, released in November 2018. With a new Banking Code of Practice taking effect in July 2019, the inquiry was an important step in finding out how banks meet current obligations and what improvements can be made for the future.

The CCMC encourages consumer groups to examine the Code obligations, read Part 1 of the Financial Difficulty Report and consider what they can contribute to Part 2.
The focus areas for Part 2 are:

  • vulnerable customers
  • natural disasters
  • proactive identification of customers in financial difficulty
  • treatment of joint debtors and guarantors, and
  • small business and agribusiness.

Contributions or questions can be sent to the CCMC Code Compliance Manager, Ms Donna Stevens, at

The Insurance Brokers Code of Practice and the Customer Owned Banking Code of Practice, are currently both also being reviewed. Commentary in general, and in relation to financial difficulty in particular, can be raised with the National Insurance Brokers Association and the Customer Owned Banking Association respectively.

The inquiry found that banks largely comply with core requirements, with notable gaps around referral for financial advice when applying for early release of superannuation; lack of awareness of financial difficulty triggers; and, in some banks, overly burdensome policies and practices regarding supporting documents. Key recommendations focused on accessibility of information, training, refining credit assessment processes and cultural change.
In the General Insurance realm, consumers and their representatives are directed to Section 8 of the General Insurance Code, which outlines extensive standards governing how general insurers and their service suppliers – including external collection agents and external claims management systems – deal with consumers in financial difficulty and how they conduct debt recovery.

The protections are broader than the wider community might think. Although it does not apply to payment of premiums, it covers an individual insured or third-party beneficiary who owes a general insurer money under an insurance policy it has issued. Consumers covered by these obligations include someone unable to pay a claim excess due to financial difficulty, or to a consumer unable to repay overpayments made to them by the insurer in error. In both cases they have the right to ask the general insurer for financial difficulty assistance.

Importantly, it also applies to people who are not customers of a general insurer but whose financial difficulty is connected with a general insurer seeking money from them for damage or loss caused by them to the insurer’s customer, for example an uninsured third party who was at fault in a car accident with an insured party.

In March 2018, the General Insurance Code Governance Committee published a guide for the industry and public on how it applies the standards in section 8.  Guidance Note 1 Financial hardship obligations – General Insurance Code of Practice is available from: Governance and monitoring.

If a consumer, or their representative, believes that a code obligation has been breached they can report their concern at