Banks sign conduct deal with ASIC

ASIC has agreed on a code of conduct with the banks that includes measures to make products easier to understand.

Anna Bligh, CEO of the Australian Bankers' Association. Picture: Hollie Adams

After months of talks, the Australian Securities and Investments Commission has signed off on a code of conduct with the nation’s banks.

The Banking Code of Practice, which was backed by the Australian Banking Association was submitted to ASIC for final approval in December.

The code of conduct, which updates the previous code of conduct signed off by the banks, is aimed at setting rules for banks around ethical behaviour, responsible lending, financial protection and also increased transparency.

It will also introduce a range of measures designed to make banking products easier to understand and customer focused.

The Australian Banking Association chief executive Anna Bligh, said, the approval process has been rigorous and comprehensive, with a number of changes made to the draft to satisfy ASIC requirements.

“Banks value their customers and the new Code is a big step towards providing better banking for all Australians.

“Customers will see real tangible benefits, including more information about changes to their accounts, delay in offering add-on insurance products and simpler contracts, with fewer conditions for small business loans,” Ms Bligh said.

Westpac chief executive Brian Hartzer welcomed the approval of the new code of conduct

“We have worked with the industry to completely rewrite the Banking Code which sets out the industry’s key commitments and obligations to our customers. Westpac fully supports the new Banking Code which is one part of how we are strengthening transparency and relationships with our customers,” Mr Hartzer said.

Bank of Queensland chief executive Jon Sutton said tha BOQ fully supported the new Banking Code of Practice, noting it “rightfully protects both individual and small business customers”.

Mr Sutton added that “the inclusion of a new dedicated section on small business lending is a significant step towards acknowledging its importance to the Australian economy” and noted “the community can look forward to a more customer focussed and sustainable banking industry”.

The code of conduct comes as banks are under intense pressure with the banking royal commission uncovering poor behaviour.

The new code of conduct also focuses in on small business lending and bolsters protections around agribusiness lending.

The ABA said the code is enforceable and banks with personal or small business customers in Australia will be required to sign up to the new Banking Code of Practice if they wish to be members of the ABA.

In a bid to overhaul their tainted image, banks two years ago agreed to target six areas of industry-led reform, including aligning banker pay with customer outcomes, better remediation, proper treatment for whistleblowers, higher standards for conduct, a new beefed-up industry code of practice, and repairing relations with the corporate regulator.