ASIC has approved variations to the Banking Code of Practice (Code).
The variations, as proposed by the Australian Banking Association (ABA), do the following:
- Amend the Code’s definition of ‘banking services’ to address an anomaly in the Code’s previous wording that had the unintended result of excluding certain types of small business banking customers who would otherwise meet the Code’s definition of ‘small business’.
- Make some minor amendments to the Code’s definition of ‘small business’.
- Extend the application of the Code’s COVID-19 Special Note, which allows for special application of specified Code provisions in light of the extraordinary external environment caused by COVID-19, for a further six months until 1 September 2021.
- Specify situations in which banks may decline to continue dealing with a representative that a customer in financial difficulty has appointed, if the bank reasonably considers that representative is no longer able to act in the customer’s best interests.
- Align the Code’s timeframes for responding to complaints with the updated timeframes in ASIC’s Regulatory Guide 271 Internal dispute resolution, which is due to commence on 5 October 2021.
ASIC previously approved the Code, as a whole, in December 2019. That Code commenced on 1 March 2020. On 1 January 2021, as part of the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020, which received Royal Assent on 17 December 2020, a new framework commenced for ASIC’s approval of codes of conduct.
If an application is made to vary an approved code of conduct, ASIC may, by legislative instrument, approve the variation. In the approval, ASIC may identify a provision of the code of conduct as an ‘enforceable code provision’ if ASIC considers that the provision or provisions meet specific legislative criteria.
This approval does not identify any enforceable code provisions. The relatively narrow set of variations are changes to existing Code provisions, and the ABA will be commencing its comprehensive triennial review of the Code later in 2021. The terms of reference for that review will specifically consider the enforceable code provisions framework.
The changes to the small business definition were recommended by Pottinger, the independent firm who reviewed the definition in September and October 2020. The review recommended that those changes be made now and that the more comprehensive changes will be considered as part of the Code’s triennial review.