“Completely rewritten” banking code now in effect

Yesterday, the newly revised and ASIC-approved banking code of practice was put into play, bringing an increased emphasis on consumer protection to the industry.

“We’ve completely rewritten the rule book for Australia’s banks,” said Australian Banking Association (ABA) CEO, Anna Bligh.

“The new code will form part of every customer’s relationship with their bank and will be strongly enforced both by an independent body, the Banking Code Compliance Committee, and the Australian Financial Complaints Authority.  

“Whether it’s through your credit card, home loan, small business loan or just day to day banking, Australian customers will see tangible benefits from this new code,” she added.

While many have voiced support for the updated code – CBA CEO Matt Comyn among them – mortgage brokers still have significant cause for concern according to CEO of the MFAA, Mike Felton.

Last week, Felton issued a warning in regards to some banks attempting to saddle mortgage brokers with the responsibility of identifying financial abuse in their interactions with customers.   

In a video update distributed on Friday evening, Felton said that the MFAA has daily been in contact with the ABA in recent weeks trying to work through the industry ramifications of the updated code before it was implemented on Monday, 1 July. However, that deadline has come and gone without a resolution being found.

“We do not have an agreed outcome that I believe is appropriate for brokers. Rather, I believe where we’ve landed poses risk to brokers and will not be a good customer outcome,” said Felton.  

“The MFAA’s preferred approach right now is to delay the implementation for brokers, or to have a period of agreed noncompliance, so that we can document exactly what is required, get appropriate legal advice, and then produce more detailed guidance and training and roll this out in an orderly manner.”

However, Felton confirmed that the MFAA’s request for a delay was not granted and reiterated that brokers and consumers alike would better benefit from caring for vulnerable customers on a “best endeavours basis” rather than through signing additional declarations.

Moving forward, the MFAA remains committed to engaging the ABA to move the industry towards a broader solution.