Frequently Asked Questions on the modified Code of Banking Practice 2004
The Code of Banking Practice is the banking industry’s customer charter on good banking practice. The revised Code of Banking Practice will come into effect when your bank adopts it. The Australian Bankers’ Association published the revised Code in August 2003. In May 2004, some changes were made to the Code’s guarantee provisions and the Code was re-published incorporating these and some related changes. These ‘Frequently Asked Questions’ (FAQs) will help explain what the Code will mean to you – your rights and responsibilities.
Please note - reading these FAQs is no substitute for reading the Code. These FAQs cover some but not all provisions of the Code and have simplified those provisions. These FAQs are to help with understanding most of what is in the Code, but should not be relied upon as advice or a complete explanation of the relevant provisions of the Code. If you seek to rely on the Code, you should refer to the Code itself and consider obtaining the services of an independent adviser.
What is the Code?
The Code establishes the banking industry’s key commitments and obligations to customers on standards of practice, disclosure and principles of conduct for their banking services. When your bank adopts the Code, it will become a binding agreement between you and your bank.
Is the Code law?
The Code is not legislation; however, banks that adopt the Code are contractually bound by their obligations under the Code.
What rights does the Code give me?
The Code gives you important rights and confirms existing rights about matters such as:
- disclosure of fees and charges and other terms and conditions;
- changes to terms and conditions and fees and charges;
- disclosure of general information about banking services;
- privacy and confidentiality;
- statements of account;
- copies of documents;
- direct debits;
- chargebacks on credit cards;
- debt collection;
- complaints handling.
Also, the Code gives guarantors important disclosure and other rights.
How can I enforce my rights under the Code?
You must first wait until your bank announces that it has adopted the Code. Then, if you think your bank has breached the Code, there are a number of steps you can take. A good first step is to raise the issue with your bank. Your bank has an internal complaint handling service to assist you. If your complaint is not immediately resolved and the internal complaint handling service cannot resolve it, the Financial Ombudsman Service (FOS) may be able to help. In this case, the FOS can be contacted on: - Toll Free 1300 780 808 or (03) 9613 7333 - Melbourne Metropolitan or visit the website: www.bfsofos.org.au
A Code Compliance Monitoring Committee (CCMC) has been set up to investigate possible breaches of the Code. Anyone can refer a possible breach of the Code to this committee.
What can the CCMC do?
The CCMC investigates complaints that banks are not meeting their obligations under the Code. Usually, an investigation starts when a consumer writes to the CCMC with a complaint about a bank. The matter is investigated and may be referred to the bank for the bank’s response to the alleged breach. The final decision on a breach of the Code is made by the CCMC in a written Determination to the complainant and the bank.
If the CCMC establishes that a bank has breached its obligations under the Code, it may ask the bank to take remedial action, or give undertakings as to its future conduct. If the bank has already recognised the breach and addressed it, the CCMC may not require the bank to take any further action.
The Code gives the CCMC the power to name a bank in connection with a breach of the Code if the bank has been guilty of a serious or systemic breach, has not promptly remedied a breach as requested by the CCMC, has breached an undertaking given to the CCMC or has not taken steps to prevent a breach recurring after being warned that it may be named by the CCMC.
In those circumstances, the bank and the grounds for naming the bank would be published in the CCMC’s annual report. The CCMC can also conduct its own Inquiries and monitor any other aspects of the Code that are referred to the CCMC by the Australian Bankers' Association.
The CCMC cannot look at claims for financial loss. Such claims should be referred to an alternative forum, such as the Financial Ombudsman Service. The Financial Ombudsman Service can be contacted on 1300 780 808 or www.fos.org.au.
How can I make a complaint to the CCMC about a breach of the Code?
You can make a compliant to the CCMC by visiting the CCMC website and filling in an online complaint form.
Or you can call the CCMC toll free: 1300 780 808 to discuss your complaint. If the CCMC can investigate your complaint, you may be asked to put it in writing.
The CCMC’s postal address is:
Code Compliance Monitoring Committee
PO Box 14240
Melbourne City Mail Centre
Melbourne VIC 8001
The CCMC’s fax number is: 03 9649 7122.
What key commitments does my bank give me?
On adopting the Code, your bank will:
- continuously work towards improving its standards of practice and service;
- promote better informed decisions about its banking services, for example, helping you with advice about its banking services;
- provide general information about rights and obligations under the banker/customer relationship;
- provide information in plain language;
- act fairly and reasonably towards you in a consistent and ethical manner – your conduct, the bank’s conduct and the banking services contract will be taken into account.
Where can I get a copy of the Code?
You can obtain a copy by contacting the Australian Bankers' Association on (02) 8298 0417 or by downloading a copy of the Code from the website: www.bankers.asn.au. But bear in mind, that you may not be able to get a copy of the Code from your bank until it announces it has adopted the Code.
How has the Code been developed?
An independent and extensive review of the original 1993 Code was conducted. The Australian Bankers’ Association (ABA) then set about drawing up the new Code in a consultative framework. The ABA is the national organisation of licensed banks in Australia. The ABA’s mission is to “Improve the economic wellbeing of Australians by fostering a banking system recognised as one of the safest, dynamic and most efficient in the world.” Any bank is free to adopt the Code, not just ABA member banks.
How do I know if my bank has adopted the Code?
The ABA maintains and publishes a list of the banks that have adopted the Code, including any amendments to the Code. Of course, you can always ask your bank.
What types of banking services are covered in the Code?
The banking transactions that are covered by the Code are banking products and services provided to individuals and small business customers.
Examples of banking products and services covered are:
- deposit and transaction accounts;
- personal and home loans;
- credit cards;
- debit cards;
- safe custody facilities;
- small business loans;
- investment loans;
- lease financing.
Who is covered by the Code?
An individual or small business that is an actual or prospective customer involved in retail banking transactions. Any small business that has less than 20 (full time or equivalent) people is covered, as well as a goods manufacturing business that has less than 100 (full time or equivalent) people (a business which does not meet either requirement is referred to in these FAQs as a “large business”). However a banking service provided for use in connection with a large business is taken not to be provided to a “small business” as defined.
When will this Code take effect?
The Code will take effect and apply to your bank when your bank adopts the Code.
Will this Code be reviewed and updated?
Yes, in August 2006 or sooner if appropriate and it will be reviewed independently.
How will I find out about the terms and conditions of my banking service?
Your bank will give them to you either before, or as soon as practicable after, you take up an ongoing banking service. You can also ask for a copy of the terms and conditions at any time.
You will also be notified about changes to the terms and conditions of the banking service and the terms and conditions will explain how the bank will tell you about any changes.
What will my bank tell me about fees and charges on my banking services?
These will be included in or with the terms and conditions given to you and you will also be notified about any changes to fees and charges or any new fees and charges.
Can I ask my bank to give me copies of my documents?
Yes, in particular, you can request a copy of any contract between you and your bank relating to a banking service you have or had with the bank, which will include applicable terms and conditions and standard fees and charges.
You can also obtain a copy of any related mortgage or security document, statement of account and any notice given to you about the bank exercising its rights.
How does my bank decide if I can get credit?
Your bank has to form its own opinion about your ability to repay a loan and it has credit assessment tools to help with this decision.
The Code says that during this assessment and decision process, the bank must exercise the care and skill of a diligent and prudent banker.
What happens if I am in financial difficulty with my loan?
If you agree, your bank will try to help you overcome your difficulties and could, for example, work with you to develop a repayment plan. This may include extending the term of the loan or changing your repayment schedule, if that is suitable.
The Consumer Credit Code allows for variations to loan contracts where the borrower is suffering hardship. If your bank thinks that these provisions apply to your circumstances, it will inform you.
How can I find out what account is best for me if I am on a low income or otherwise disadvantaged?
If you tell the bank that you are a low income earner or disadvantaged person or if when dealing with you, bank staff become aware you are receiving Centrelink or similar payments, they will give you information about accounts that might be suitable for you. You can also ask for this information. This does not apply to small businesses.
What will my bank tell me about its banking services?
The bank is committed to help you with an explanation or advice about its banking services if you ask for it. A properly trained staff member can do this or he or she will refer you to the appropriate adviser, or recommend you seek or use your own adviser.
Also you can ask the bank for information about:
- account opening procedures;
- the bank’s obligations regarding the confidentiality of your information;
- complaint handling procedures;
- the nature of bank cheques and a bank’s right to dishonour a bank cheque;
- whether and when to inform the bank if you are in financial difficulty;
- account identification requirements;
- tax file number legislation.
If I open an account with cheque access, will the bank help me with information about cheques?
You will be given information on:
- cheque clearing;
- the effect of crossing a cheque;
- the meaning of “not negotiable” and “account payee only”;
- the significance of deleting the words “or bearer”;
- stopping a cheque;
- hints on how to reduce the risk of someone altering your cheque;
- cheque dishonours.
What information will I be given about application fees?
Your bank must tell you about the existence of any application fee or charge, and tell you in advance whether the fee or charge is refundable, if your application is declined or not pursued.
Can the bank use funds from my other accounts at the bank to repay my overdrawn account?
The law gives a bank the general right to combine your account with another account you have with the bank which is in credit, unless there is agreement to keep those accounts separate. Your bank must tell you when you open an account whether the new account can be combined with your existing account and the consequences. Your bank will tell you if it has combined your accounts.
How often should the bank send me a statement of account?
For a deposit account, at least every six months unless your account is a passbook account – in which case your passbook is your statement record.
You may ask for more frequent statements on a deposit account.
For a loan or other credit account, you will be given a statement at least either:
- every 40 days;
- every three months;
every six months;
depending on the type of credit account you have.
In cases of default, if practicable, you will get a statement of your loan account or your bank will tell you that statements of account are available and how to obtain them.
In some circumstances, your bank will not give you a statement of account, for example, if it has tried unsuccessfully to locate you or you have not conducted any activity on your account.
Will my bank help me if I have a problem with a direct debit on my transaction account?
Yes - You can ask your bank to help you if you want to cancel a direct debit request applying to your transaction account that you have given to a supplier, like a retailer, from whom you are purchasing goods or services. Your bank will promptly process your instruction to cancel the direct debit request.
If you want to lodge a complaint about an unauthorised or irregular direct debit, your bank will promptly process your complaint.
In the case of a cancellation or a complaint, you will not be asked to first sort out the matter with the supplier concerned.
This only applies to transaction accounts, not credit cards. For credit cards, there is a different system of charging disputed transactions back to the supplier.
Will my bank help me with a credit card transaction that I dispute?
Yes, under credit card scheme rules, your bank can reverse a disputed transaction if the rules permit and the claim is made within time limits under the scheme rules. This process is called a ‘chargeback.’
The Code provides that your bank will claim a chargeback right where one exists and you have told your bank about the dispute in time.
It is important if you dispute a credit card transaction to let your bank know as soon as possible to make sure your claim is not made too late.
You will also be given general information about chargeback rights in or with the credit card terms and conditions. This general information will also be included with credit card statements at least once every twelve months.
What information can I expect to be given about a foreign exchange service (eg. If I want to change currency or send money overseas)?
The information you can expect to be given is:
- if known, the exchange rates and commission charges that will apply;
- otherwise, details of the basis on which the transaction will be completed;
- an indication of when money sent overseas would normally arrive.
Credit and debit cards and travellers’ cheques are not covered by the above.
What will the bank tell me if I want to take a loan in foreign currency?
You will be given:
- a general warning in writing of the risks arising from exchange rate movements;
- information about how you might be able to limit these risks.
What will the bank tell me about how I should protect my credit and debit cards, cheques and passbooks?
Your bank will give you information (usually safeguarding tips) on the advisability of safeguarding your credit and debit cards, cheques and passbooks that could include:
- how to notify the bank of the loss, theft or misuse of these payment instruments;
- please note, banks usually require you to notify them, as soon as possible, of the loss, theft or misuse of your credit and debit cards, cheques, passbooks, Personal Identification Numbers (PINs) and passwords;
- consequences of not notifying the bank as soon as possible of the loss, theft or misuse of your payment instruments.
If your bank has given you this information on a previous occasion, it does not have to do this again.
Do I receive any special rights if I go into a loan with another person?
Before the bank allows you to become a co-borrower, your bank has to take all reasonable steps to ensure that you understand you may be liable for the full debt and how you can stop your liability for further debt building up on the account.
However, a bank must not allow you to become a co-borrower if it is clear to it that you will derive no direct benefit from the loan. In this case, if you still wish to provide assistance to the borrower, it may be possible for you to guarantee the loan.
What should the bank tell me about having a joint account with another person?
You should receive information on:
- how funds can be withdrawn;
- how to vary your instructions to the bank;
- how you might be liable for a debt on the joint account.
Can I protect myself against someone continuing to use a subsidiary card on my account?
Yes, you can. You tell your bank that you want the subsidiary card cancelled. But before cancelling the card, you will have to show your bank you have taken all reasonable steps to have the subsidiary card returned.
Can I expect the bank to provide me with any important information about becoming a guarantor for a loan?
Before taking a guarantee from you, your bank must provide, a prominent notice to you:
- to seek independent legal and financial advice on the effect of the guarantee;
- that you have the right to refuse to enter into the guarantee;
- that there are financial risks involved;
- that you have a right to limit your liability;
- that you have a right to request additional information about the facility you are being asked to guarantee.
What if I am a sole director of a company guaranteeing the loan for my company?
When a borrowing company has only one director, some pre-contractual disclosure provisions of the Code will not apply to that sole director’s guarantee of the company’s loan. This recognises the responsibility of the sole director, who is operating a corporate business, to be duly cognisant of his or her company’s financial performance.
Will the bank give me information about the debtor that helps me understand the risk I may be taking on as a guarantor?
Yes. For example, from June 1 2004, a bank must tell a prospective guarantor whether there have been excesses on the debtor’s credit facilities or over drawings on the debtor’s accounts of $100 or more within the previous six months. After February 1 2005, the bank will provide this in list form for the prospective guarantor. Progression to a list delivers more useful information for the prospective guarantor. The $100 threshold was added to the Code in May 2004 to highlight amounts of excesses and overdrawings of a material nature that might affect the decision of a prospective guarantor whether to give the guarantee to the bank.
For commercial asset financing facilities, the bank does not have to tell you about these things in some circumstances if you are a director of the debtor company and for other credit facilities if you are the sole director of the debtor company.
Also from June 1, 2004, a bank will tell a prospective guarantor about notices of demand and dishonours on the debtor’s accounts within the last 12 months. By June 1, 2005, this will cover a two-year period.
What other information will I receive from the bank before I guarantee a loan?
If you are entitled to receive the information in the preceding question:
a) the bank will give you a copy of:
- any related credit contract, a list of any related security contracts and, on request, copies of the related security contracts (Providing a list of related security contracts and copies of those security contracts on request was added to the Code in May 2004 to reduce delays and inconvenience in providing unnecessary copies);
- any related credit report from a credit reporting agency;
- the final letter of offer provided to the debtor by the bank and, if earlier letters of offer have contained conditions which have since been satisfied, details of those satisfied conditions;
- any current related credit insurance contract held by the bank;
- financial information about the loan you are to guarantee, given to the bank by the debtor in the prior two years;
- the latest statement of account for the loan you are to guarantee;
- any statement of account covering the relevant period where notice of demand has been given to the debtor or where there has been any dishonour on a facility the debtor has or has had with the bank;
- any unsatisfied notice of demand within the past two years in relation to the loan to be guaranteed;
- any other information about the loan you reasonably request.
b) you will be allowed until at least the next day to consider this information before the bank asks you to sign the guarantee. If you have received independent legal advice beforehand, the bank is allowed to request that you sign the guarantee on the same day you receive the information.
Despite (a) and (b), the Code contains additional protection for guarantors including limiting your liability to a set amount and allowing you to withdraw from the guarantee before funds are advanced or if the terms of the loan change materially between the time the loan contract was first shown to you and when you sign the guarantee.
Will this information always be provided to a prospective guarantor?
No, to maintain competitive neutrality, in some circumstances company directors who guarantee commercial asset financing facilities such as commercial leasing and hire purchase facilities will not receive some pre-contractual disclosure that would normally apply to a prospective guarantor. This exemption is strictly limited and recognises the dynamic features of this type of financing. Banks would not be able to compete with finance companies etc which do not have to comply with a code such as the Code of Banking Practice.
When a borrowing company has only one director, most of the pre-contractual disclosure provisions of the Code will not apply to that sole director’s guarantee of the company’s loan. This recognises the sole director who, in operating a corporate business, is responsible for the company’s financial performance.
When the borrowing company has more than one director, the directors can opt out of receiving all or some of the information in part (a) of the preceding question. The bank will tell the directors how to opt out. The directors can also opt out of having to wait until the next day, after receiving information, before they sign or give the guarantee to the bank. These options were added to the Code in May 2004 to finetune the Code to ensure it worked effectively and efficiently. The Code is designed to foster good relationships between banks and their customers, including guarantors. The modifications to the disclosure requirements, when the guarantors are also the directors of the borrowing company, were made in response to objections by some company directors to being forced to receive information that they already knew about their company. Banks must not attempt to influence the guarantors’ choice on these matters.
What commitment will the bank give if it plans to close one of its branches?
The Transaction Services and Branch Closure Protocol has been adopted, committing the industry to providing rural and remote areas with ongoing face-to-face banking services for personal and small business customers after branch closure.
After a branch closes, banks are committed to maintain face-to-face services through an existing outlet, franchising arrangements with the community, agency arrangements with local businesses and Australia Post, and including in-store facilities.
This protocol is consistent with the view from the Hawker Regional Services Parliamentary Inquiry that the industry should develop a minimum standard of service delivery as a guideline for banks in the event of closing rural and remote branches.
If I prefer, can the bank send me electronically information required under this Code?
Yes, if you agree and the law doesn’t prohibit it.
How will the bank’s compliance with the Code be monitored?
Banks have agreed to have their compliance with this Code independently monitored by a three-member panel called the Code Compliance Monitoring Committee (CCMC). The CCMC has been set up as an independent body with consumer, small business and banking industry representatives.
The CCMC is able to receive complaints from anyone who thinks that a bank has breached the Code. The CCMC has the power to investigate that complaint and decide whether a breach has occurred. If the breach is serious or systemic, the CCMC can publicly name the bank in its annual report. The CCMC can also name a bank that fails to comply with a request from the CCMC to remedy a breach, or has breached an undertaking given to the CCMC, or has taken insufficient steps to prevent the recurrence of a breach.
Each bank will lodge an annual report with the CCMC on its compliance with the Code.
Naming a bank means that the members of the public and regulators will know about the breach with resulting damage to the bank’s reputation. A regulator might even consider action of its own.
For more information visit the CCMC's website.
If I have a dispute with my bank, how should the bank handle my dispute?
If your complaint is not immediately resolved, the bank must handle the dispute through its free internal dispute resolution process. You’ll be given the name and contact number of the person investigating your dispute and within 21 days you’ll be told of the outcome. If more time is needed to complete the investigation, you will be told, but the bank has to complete investigation within a further 24 days (total time from receipt of complaint 45 days), unless there are exceptional circumstances.
If the bank is unable to resolve the dispute within 45 days, unless the bank is waiting for you to reply to a request, it will tell you why and when a decision can be reasonably expected. In the meantime, the bank will give you monthly updates.
If my complaint is not resolved at my bank, is there any other help I can seek?
Yes. The bank will have an external impartial process for resolving disputes - the Financial Ombudsman Service (FOS). If you would like to know more call the FOS: Toll Free 1300 780 808 or (03) 9613 7333 - Melbourne Metropolitan or visit the website - www.fos.org.au.
Also read more in the above FAQ: How can I make a complaint to the CCMC about a breach of the Code?
How will I find out about my bank’s dispute resolution processes?
You can telephone the bank to enquire or information will be available in branches, on internet sites, and through telephone-based banking services. The bank will also tell you about its internal and the external dispute resolution processes if it is unable to immediately resolve your complaint. If you are not wholly satisfied with the internal dispute resolution process outcome, your bank must again provide you with information about the external dispute resolution process.
How does this Code protect my privacy?
It requires your bank to comply with all privacy laws, as well as its general duty to you to keep your banking relationship confidential.
Last updated 22 August, 2012