The ABA Banking Code of Practice: what it covers and how it's enforced
The Australian Banking Association's Banking Code of Practice binds subscribing banks to standards that go beyond the law. Here's the framework, the BCCC oversight, and how customers use it.
What the Code is
The Banking Code of Practice is a standard published by the Australian Banking Association (ABA). Banks choose to adopt this Code, which becomes a binding agreement for their operations.
Subscribing banks are required to adhere to the Code in all interactions with individual and small business customers. This ensures a baseline level of conduct across the banking sector.
The Code’s status is formally recognised through approval by the Australian Securities and Investments Commission (ASIC) under s 1101A of the Corporations Act 2001. This approval provides a specific legal standing for the Code.
What the Code covers
The ABA Banking Code of Practice sets out conduct standards for participating banks. These standards require banks to operate with honesty, fairness, and ethical behaviour. They also mandate extra care when dealing with vulnerable customers and adherence to all relevant laws.
The Code details specific commitments relating to various banking practices. These include providing clear and simple disclosure of information, ensuring fair contract terms, implementing fair debt-collection practices, offering protections for guarantors, providing support to customers experiencing financial difficulty, managing branch closures responsibly, handling deceased estates with care, and upholding chargeback dispute rights.
The Code’s application extends beyond the minimum legal requirements. Many of the commitments outlined within the Code go further than the obligations imposed by the National Consumer Credit Protection Act 2009 and the Australian Consumer Law.
The Banking Code Compliance Committee
The Banking Code Compliance Committee (BCCC) is an independent body responsible for monitoring how subscribers adhere to the Banking Code of Practice. Its primary function is to oversee compliance and ensure banks fulfil their obligations under the Code.
The BCCC has the authority to investigate suspected breaches of the Code. When breaches are identified, the BCCC can publicly name the subscriber involved in its reports and apply sanctions.
Sanctions imposed by the BCCC can take several forms, including requiring the subscriber to rectify the breach, publicly naming the subscriber, and recommending changes to the subscriber’s practices.
Customer remedies
Customers who believe a bank has breached the Banking Code of Practice may initially raise a complaint directly with the bank. Banks must have an internal dispute resolution process in place to address these concerns, and this process is governed by ASIC Regulatory Guide 271.
If a customer remains dissatisfied after the bank’s internal dispute resolution process, they have the option of escalating the complaint to the Australian Financial Complaints Authority (AFCA). AFCA can consider claims relating to breaches of the Code as part of a wider dispute resolution process.
Customers also have the ability to report concerns about potential breaches of the Code directly to the Banking Code Compliance Committee (BCCC).
Frequently asked
Is the Banking Code legally binding?
It is a binding contract between a subscribing bank and its customers, and it is approved by ASIC under s 1101A Corporations Act 2001. It is not a statute, but a subscriber is bound to comply with it.
What can the BCCC do if a bank breaches the Code?
The Banking Code Compliance Committee can investigate, name the breaching subscriber, require rectification, and recommend changes to bank practices. Customers can also take Code-breach issues to AFCA as part of their dispute.