Progress on banking code, but missed opportunities too: consumer advocates

The Australian Banker’s Association (ABA) response to the Independent Review of the Code of Banking Practice (Khoury Review) is a positive start, but consumer advocates say there are some missed opportunities for the banking industry.

Advocates say improving responsible lending assessments and making it easier to cancel credit cards will help Australians have a better experience with their banks. Those doing it tough will also be better supported, with banks committing to proactively assisting customers experiencing financial difficulty (including small businesses) and for fee-free basic bank accounts to be more widely promoted.

“The ABA and Australia’s banking industry have a real opportunity to rebuild trust with Australians” said Karen Cox, coordinator of Financial Rights Legal Centre. “Having the code approved by the Australian Securities and Investments Commission (ASIC) is an important step and we’re hopeful we’ll see strong resourcing put into monitoring and enforcing the code.”

The consumer groups have pointed out key opportunities missed from the Khoury Review that are either not being adopted by the ABA, or are only partially supported:

  • Credit cards – banks do not support the recommendation to prohibit banks from spruiking credit card limit increases, nor the recommendation that banks should standardise interest calculations.
  • Consumer credit insurance – banks do not fully support recommendations to address high-pressure sales of consumer credit insurance, including the proposal for consumers to ‘opt in’ to purchasing these products.
  • Default fees – banks have called for further time to respond to a recommendation designed to limit the ability of banks to profit from default fees.
  • Debt collection – banks do not support being required to monitor compliance by businesses that they sell debt to.

“To demonstrate that banks are putting their customers first, they should not be pushing credit or other products unless this is sought by the customer. If the banks don’t support prohibiting unwanted credit card limit increase marketing, consumer advocates will push for legislative change”, said Ms Cox.

“The ‘would you like fries with that’ selling practices that spruik consumer credit insurance results in people being sold junk insurance”, said Gerard Brody, CEO of Consumer Action Law Centre.

“The Khoury Review recommended that customers be given the opportunity to opt-in to these products through a one day delay. This is a sensible way to ensure people only buy products that they’ve fully considered and understand, so it’s disappointing banks want to continue with practices that have been proven to hurt Australians”, said Mr Brody.

“Financial counsellors welcomed the recommendation that, where appropriate, banks will refer customers in financial difficulty to financial counselling organisations. The ABA has supported this recommendation, and we look forward to banks continuing to work with financial counsellors to support those experiencing financial difficulty”, said Fiona Guthrie, CEO of Financial Counselling Australia.

The consumer groups said that the changes proposed by the Khoury Review were significant, and welcomed commitments by the banks to continue to consult with consumer groups through the implementation stage.


  • The ABA instituted a review of its Code of Banking Practice in mid-2016 to make sure that banks “have the right culture, the right practices and the right behaviours.”
  • Consumer groups, including the Consumers’ Federation of Australia, contributed a 120-page joint submission outlining their key concerns with respect to everything from unfair fees and charges, financial hardship practices, to dodgy sales and making direct debit cancellations easier.