Financial Counsellors welcome updated Banking Code

Financial counsellors have welcomed the release of a revised Code of Banking Practice.

Banks obviously already have to comply with a number of laws – credit laws, privacy laws, fair trading laws – to name a few. The strength of a Code of Practice is that it goes beyond black letter laws such as these. An effective code is akin to a set of promises that an industry makes to its customers. Importantly, an effective code is also enforceable.

For these reasons, financial counsellors, in dealing with banks on behalf of their clients, will frequently refer to the expanded obligations under the Code of Banking Practice, for example in negotiating hardship arrangements or cancelling direct debits. The Code also provides a complaint mechanism through the Code Compliance Monitoring Committee.

“We are very pleased that the new Code of Practice contains a number of standards that will help consumers”, said Fiona Guthrie, Executive Director of FCA.

The strengthened obligations include:

  • Better assistance for people living in remote Indigenous communities. FCA welcomes the positive obligation to train staff to be culturally aware and a commitment to provide assistance to help Indigenous consumers meet identification requirements;
  • Clearer guidance for assisting customers in financial hardship. For example, a bank may proactively contact customers they believe may be struggling. There is an important recognition that early access to superannuation should not be required as a mechanism for overcoming financial difficulty and that consumers should seek independent advice, for example, from a financial counsellor;
  • Clearer requirements for debt collectors acting on behalf of a bank. Banks will be able to direct these companies to comply with the debt collection guidelines published by the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission.

The Code also requires banks to be more active in promoting no fee and low fee accounts for people on low incomes, including those holding a Commonwealth Seniors Health Card, Health Care Card or Pensioner Concession Card.

“Access to a bank account is fundamental for participation in Australian society”, said Ms Guthrie. “While we are really pleased that the new Code will improve the promotion of low fee and no fee accounts, there is more to be done in this area as many people are still not accessing the right accounts. Financial counsellors would like to see the banking industry proactively identify Centrelink recipients and advise them of the existence of these accounts.”

The revised Code of Practice will come into effect by 1 February 2014.