Today ASIC opened its consultation on the Australian Banking Association’s (ABA) proposed changes to its Banking Code of Practice (the Code). The Code contains a set of contractually enforceable standards that customers and small business can expect subscribing banks to uphold. The ABA plans to apply for ASIC approval of the revised Code.
This is the first time that ASIC has undertaken a public consultation before making a decision on approving the Code. ASIC is seeking to ensure the Code continues to provide real benefits to consumers, small businesses, and subscribing banks before deciding whether to grant final approval.
The consultation will help inform ASIC’s decision on whether to approve the proposed Code, and is focussed on obtaining feedback and insights on the following key issues:
- whether the proposed Code imposes obligations on subscribers that are beyond those required by the law and, in doing so, addresses key potential consumer harms;
- whether the proposed Code provides for effective administrative systems for monitoring compliance and whether the obligations are capable of being enforced;
- whether any Code review recommendations that the ABA has not supported should be included in the proposed Code;
- whether the recommendations accepted by the ABA are appropriately reflected in the proposed Code and proposed Charter;
- whether the proposed Code strikes an appropriate balance between simplifying the Code and minimising regulatory duplication on the one hand, and promoting consumer awareness of protections applicable to their banking relationship on the other; and
- the role of industry guidelines.
To address these issues, interested parties are invited to review the proposed Code, the proposed changes to the Banking Code Compliance Committee Charter, and a new customer-facing document, which serves as a Customer Guide: Banking with confidence: your key rights and protections as a customer.
ASIC does not develop or administer the Code. The ABA is the ‘owner’ of the Code. ASIC’s role is to consider whether to approve the Code using our statutory powers and according to the relevant criteria.
The consultation closes at 11:59pm AEDT on 15 January 2024. Submissions should be sent to BankingCode@asic.gov.au.
ASIC will consider the feedback received and look to make a decision on approving the code in the first half of 2024.
While it is not mandatory for industry codes to be submitted to ASIC for approval, ASIC’s approval signals that a code is one in which consumers and industry participants can have confidence.
ASIC has broad discretion to approve, on application, industry codes of conduct. Regulatory Guide 183 Approval of financial services sector codes of conduct provides guidance on ASIC’s approach. In undertaking a review of industry codes, ASIC considers whether the codes respond to current and emerging consumer issues and deliver substantial benefits to consumers.
ASIC has noted the key issues that it is seeking views on in CP 373 but is open to interested parties raising other issues in their submissions.
ASIC first approved a version of the Code in July 2018 (see 18-223MR). This was the first broad-based industry code that ASIC approved under relevant powers. Further revisions to the Code were since approved, including updates to reflect recommendations from the 2018 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
In 2021, the ABA arranged for an independent review of the Code, which was undertaken by Mr Mike Callaghan AM PSM. The final report of the Code review was published on 26 November 2021 and contains 116 recommendations, to which the ABA formally responded: see ABA response to the Code review.
Consultation Paper 373 Proposed changes to the Banking Code of Practice