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12-139MR ASIC implements new bank account switching rules
ASIC has today released new guidelines to support bank account switching reforms. This guidance updates industry codes to reflect the new rules so that financial institutions and consumers can have confidence in their rights and responsibilities when switching accounts from 1 July 2012.
ASIC has updated both the Electronic Funds Transfer Code (EFT) and the new ePayments Code which will succeed the EFT Code from 20 March 2013. The revised EFT and ePayments Codes will help industry comply with their responsibilities under the changes.
A summary of amendments made to the ePayments Code is available on the ASIC website. There is also a summary of the account switching amendments to the EFT Code.
As a result of these changes, a financial institution (bank, building society or credit union) is now required to provide a list of regular direct debits and credits to a new financial institution at a customer’s request.
ASIC Commissioner Peter Kell said the revised codes will help industry understand their responsibilities and clarify what financial institutions need to do to comply with the new switching rules.
‘We are confident these revised codes will help industry through this change and ultimately make it easier for consumers to move their everyday transaction account from one financial institution to another’, Mr Kell said.
New switching and listing rules
Under the new rules, if a consumer wants to switch their everyday transaction account from one financial institution to another, they can ask their new provider to contact their old provider to get a list of their regular direct debits or credits made from/to their old transaction account in the past 13 months. This includes debits such as:
regular utility payments
mortgage or rental payments or
gym memberships, for example.
Regular credits may include:
pension payments or
regular income such as investment dividends, for example.
A consumer can decide which regular direct debits and/or credits they would like to switch to their new transaction account, with the help of their new financial institution. Under the new rules, a consumer would sign one form authorising their new financial institution to provide all of the relevant organisations with their new account details.
Consumers would need to re-establish some regular payments themselves with their new financial institution (e.g. regular internet banking ‘pay anyone’ and BPAY payments).
ASIC acknowledges the assistance of consumer and industry stakeholders in developing the revised codes.
For more information about account switching reforms go to the Australian Banking Reforms website.
The ePayments Code was first issued on 20 September 2011and covers key consumer protection measures concerning electronic payments such as credit cards, funds transfer and stored value products. The transition period for the new Code finishes on 20 March 2013.
The current EFT Code was first issued on 1 April 2001. It covers key consumer protection measures concerning funds transfer and stored value products. The Code will cease on 20 March 2013, as by then all subscribers will have transferred to the ePayments Code.
ASIC has revised both codes to incorporate the new listing and switching rules as the transition period for subscribers to move from the EFT Code to the ePayments Code is still underway. It is important that subscribers to both Codes are covered by the new rules.