Updated Regulations for Banks to Assist Customers in Financial Hardships
Banks may face public scrutiny for not offering sufficient assistance to customers dealing with financial challenges amidst rising living costs.
This comes after some of the major banks received criticism for imposing fees on deceased customers and abrupt branch closures.
The Australian Banking Association’s updated code of conduct will take effect on Feb. 28 with the goal of fostering trust and providing protections for customers.
The updates include changes to the definition of small businesses, extending coverage to 10,000 more enterprises, and enhancing support for individuals experiencing financial hardship.
Under the revised code, businesses can hold an additional $2 million (US$1.2 million) in debt before they no longer qualify as small.
Anna Bligh, the association’s CEO, stated that the updated code establishes new standards and streamlines others to clarify what customers can expect from their bank.
Related Stories
“The updated code provides greater clarity on how banks will assist customers facing financial difficulties, including implementing hardship arrangements to support their recovery.
“It strikes a balance between introducing new protections and making parts of the code simpler to understand and apply, not only for bank staff but also for customers and their representatives,” Bligh explained.
The code also features new commitments to inclusivity and accessibility, such as arranging external support like translators for individuals with limited English proficiency.
It also suggests training for staff to help identify customers eligible for low- or no-fee accounts.
Public naming and shaming is the most severe penalty for banks violating the code, which is not legally enforceable but aims to build trust and encourage accountability.
ANZ was publicly criticized in July for significant deficiencies in its compliance frameworks, including charging fees to deceased customers and delaying refunds.
Westpac was reprimanded for inadequate support to customers in the remote community of Tennant Creek in the Northern Territory after closing a branch there in June.
The Banking Code Compliance Committee may also report serious or ongoing systemic breaches to the Australian Securities and Investments Commission.
