By Bank of us CEO Paul Ranson
The Australian Securities and Investments Commission has recently approved a new Banking Code of Practice.
Did you miss it?
Well, it’s not entirely surprising as it was approved during the hearings of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and was, perhaps, lost among the stories of financial misconduct.
It’s ironic it received little fanfare because the new Australian Banking Association Code has been under review for some time and is part of the Association’s attempt to build trust and confidence in banks – the very things that the stories from the Royal Commission have been eroding.
In a statement about the new Code, the ABA CEO Anna Bligh said the review was recognition by banks they need to do better when it comes to customer service and meeting community expectations.
I agree the new code has addressed some of the banks’ failings in the areas of small business lending, overly complicated products, and complex loan terms and conditions, but not all.
And I’m not alone. Australian small business and family enterprise ombudsman Kate Carnell has also raised concerns about the ABA’s code, especially in relation to small business lending.
What is curious about Ms Carnell’s comments is her call for the new Banking code of Practice to be adopted across the entire industry. Comments that echo the ABA’s own call for its new code to be adopted by non-ABA members.
If you asked the Tasmanian on the street, I think most would be surprised to learn not all banks are governed by the ABA Code. Yet, the reality is that the ABA Code only applies to the 24 or so member banks of the ABA.
So, what are the protections afforded the customers of the remaining financial institutions?
Well, if you believe the Ombudsman and the ABA CEO, you’d think there were none.
There are over 70 financial institutions, identifiable as customer owned banks, building societies and credit unions that are members of the Customer Owned Banking Association – of which Bank of us is one – and that subscribe to their own Code of Practice, namely the Customer Owned Banking Code of Practice (COBCOP).
We have a long history of putting customers first and behaving ethically and COBCOP outlines how the sector delivers on its pledge to always put the customer first.
Our customers already have confidence in knowing they are covered by a plain English commitment to fair and responsible banking.
Like all good charters, it needs to be reviewed regularly.
The current COBCOP was always scheduled for review early next year prior to the commencement of the new ABA code on July 1, 2019.
COBA, as our industry body, has started the review process on our behalf. They have been watching several related processes in order to determine its timing and scope.
These processes include ASIC’s approval of the BCOP, other government policy announcements on codes and of course, the Financial Services Royal Commission.
The Royal Commission has uncovered shocking examples of misconduct in our sector, in particular by the big 4 banks and the approval of the new ABA Banking Code is a step in the right direction in raising banking standards.
COBA have stated that they will take the ABA’s code into account in its review. I am supportive of any change across the financial services industry that will help build trust and confidence and improve consumer protection.
We look forward to making sure the COBCOP continues to meet our customers’ expectations.