As of today, Australian banks will be held to a higher standard with a new code of practice that the industry says has “real teeth”.
“This is a new rule book for Australian banks,” said Australian Banking Association chief executive Anna Bligh.
“It’s a set of rules about how they treat customers, and it provides customers with rights and protections that are new.”
Every major bank will now offer low- or no-fee accounts to lower income earners, people with credits cards will be told when their low-interest rate introductory offers will run out and there will be a three-day cooling-off period offered to guarantors of home loans.
In an effort to regain the trust so many banks lost after shocking revelations during the banking royal commission, every major bank has agreed to be bound by the code, which coincides with the start of the new financial year.
There are serious consequences for banks that breach the code, which will be monitored by an independent body.
“This code has real teeth. If something goes wrong, a customer can enforce it, and there are serious consequences for those who breach it,” said Ms Bligh.
Instead of waiting for customer complaints, an independent body set up to monitor banking practices will conduct random ‘secret shopper reviews’ and will name and shame institutions doing the wrong thing, she added.
Banks and financial advisers support the new code, which will evolve to even better support customers.
“Enforceability is obviously key,” said Financial Counselling Australia chief Fiona Guthrie.
“We always think there’s things that can be done better, but that’s for the next iteration, and these documents will evolve over time.”
Ms Bligh agrees.
“There are big cultural shifts to be made,” she said.
Banks have already trained staff to meet the strict standards set by the new code. Further changes are expected in March 2020.
The code is one of many responses to the royal commission, said Federal Government frontbencher Simon Birmingham.
“We expect the banks to live up to a higher standard of conduct in the future and they will be held to account for it,” he said.
Will this new code help restore your faith in banks and other financial institutions?
If you enjoy our content, don’t keep it to yourself. Share our free eNews with your friends and encourage them to sign up.