Banking Code of Practice Setting the standards of practice for banks, their staff and their representatives 28 February 2025
Australian Banking Association Banking Code of Practice Setting the standards of practice for banks, their staff and their representatives Australian Banking Association PO Box H218 Australia Square NSW 1215 Telephone 02 8298 0417 Web https://www.ausbanking.org.au/ Banking Code of Practice Published date 27 June 2024 Effective from 28 February 2025 2 | ausbanking.org.au
Our role in society Australia’s banks play an important role in contributing to the prosperity of the nation’s economy, for the benefit of all Australians. Our customers count on us to provide them with a safe place to deposit money, to offer a wide range of options to access banking and financial services, and to help businesses start and grow. We understand that trust is critical to our relationships with customers and that for us to earn that trust, we need to do the right thing. We acknowledge that our responsibilities to customers, investors, employees and the broader community must be carefully balanced. Customers, investors, employees and communities expect our behaviour to meet high ethical standards, backed up by the right internal culture and practices. We are committed to continuously improving and being accountable. In fulfilling these responsibilities, we will continue to contribute to the stability, strength and prosperity of Australia’s financial system and society. To do this, we will look to continually improve our banking services and how we engage with our customers and communities. The Banking Code of Practice is one of the ways we strive to achieve these goals. Banking Code of Practice | 3
Table of Contents Introduction 6 What is the Banking Code of Practice? 6 Guiding principles 7 Your rights and how to enforce them 8 Resolving complaints 8 Court action 8 The Banking Code Compliance Committee 8 Reporting to the BCCC 8 Resourcing the BCCC 8 Complying with requests of the BCCC 8 ABA industry guidelines and protocols 9 The Code 10 PART A - Our dealings with you under the code 11 A1 Who the Code applies to and how 11 A2 Our relationship with you 12 A3 Communicating with you 12 PART B – Customers 16 B1 Inclusive and accessible banking 16 B2 Taking extra care with customers who are experiencing vulnerability 16 B3 Banking services for people with low or no income 17 B4 Lending to individuals 18 B5 Lending to Small Business 19 B6 Guaranteeing a Loan 21 B7 Farmers 26 B8 Deceased estates 28 PART C - Banking services 30 C1 Joint Accounts 30 C2 Direct debit and recurring payment services 30 C3 Credit and debit cards 30 C4 Consumer credit insurance (CCI) 31 PART D - When things go wrong 32 D1 Contact us if you are experiencing Financial Difficulty 32 D2 Complaints 35 PART E - Definitions 36 4 | ausbanking.org.au
The Banking Code of Practice is an important pillar of the financial services regulatory framework, setting a high standard of customer protections for Australians. It provides customers with safeguards and protections that are not set out in law. As subscribers to the Code, ABA member banks remain committed to meeting a higher standard of customer protections for Australians. This latest update of the Code is the culmination of an extensive review and has been developed in consultation with consumer representatives, small business organisations and regulators. The review has resulted in significant uplift of Banking Code provisions and includes additional protections for small business customers, guarantors, vulnerable customers and customers requiring additional support. This updated Code has again been approved by the Australian Securities and Investment Commission (ASIC). I look forward to the Banking Code of Practice continuing to improve the banking experience for all customers. Anna Bligh CEO, Australian Banking Association Foreword by ABA CEO Anna Bligh Banking Code of Practice | 5
Introduction What is the Banking Code of Practice? The Banking Code of Practice (the Code) sets out standards of practice and service in the Australian banking industry for individual and small business customers, and their guarantors. The overall objective of the Code is to provide customers with safeguards and protections not set out in the law. The Code is intended to complement the law and, in some areas, set higher standards than the law. The Code was first introduced in 1993. Since then, it has undergone multiple improvements, responding to emerging issues and the changing needs of our customers, to ensure it remains relevant. Over time, many of the standards embedded in the Code have been included in the law. This version of the Code has been developed in close consultation with key stakeholders including consumer groups, government, regulators and the banking industry. By promoting best practice, the Code has led to higher standards in the banking and financial services industry. It replaces the previous version dated 5 October 2021. 6 | ausbanking.org.au
Guiding principles The Code is underpinned by these guiding principles shared by all member banks. 1. Trust and confidence a) We are committed to earning and retaining the trust of our customers and the community. b) We are committed to making promises and keeping them to deliver good customer and community outcomes. c) We will comply with all laws relating to banking services. d) We will protect your privacy. e) We recognise our role in society and our impact on the wider community. 2. Integrity a) We will act honestly and with integrity. b) We will be fair and responsible in our dealings with you. c) We will build and sustain a culture based on strong ethical foundations. 3. Service a) We will deliver high customer service and standards. b) We will ensure banking services are accessible and inclusive. c) We will raise awareness of the basic (low, or no fee) banking products that we may offer. d) We will work to help you if you are experiencing financial difficulty. 4. Transparency and accountability a) We will communicate with you in a clear and timely manner. b) We will be accountable in our dealings with you. c) We will be transparent in our communications with you. Banking Code of Practice | 7
Your rights and how to enforce them The Code is part of a range of customer and guarantor protections, including those under Australian law. The types of protections that apply to you depend on what type of customer or guarantor you are, and what type of banking service you have. You are able to hold us to these commitments in a variety of ways including, but not limited to: Resolving complaints Internal Dispute Resolution (IDR) If you have a complaint about a banking service we have provided to you or think we have not met our obligations to you under the Code, contact us in the first instance. We will try to resolve your complaint through our IDR service. Australian Financial Complaints Authority (AFCA) If you are not satisfied with our response, you can make a complaint to AFCA if your complaint fits within their rules. We are bound to cooperate with AFCA in dealing with your complaint. AFCA decisions are binding on us. Lodging a complaint through our IDR service or AFCA is free of charge. Court action You may also be able to bring a court action to enforce your rights. You may wish to seek independent legal advice about this. However, you may wish to first attempt resolving your complaint via IDR or AFCA as these options are free and easy to access. The Banking Code Compliance Committee We have established an independent Code monitoring body, the Banking Code Compliance Committee (BCCC) to monitor our compliance with the Code. Further details on the BCCC’s role in Code monitoring, compliance, complaints, powers and sanctions can be found in the BCCC Charter bankingcode.org.au/about/the- committee/our-charter. Reporting to the BCCC As part of its role, the BCCC collects information about potential Code breaches, particularly issues that may be serious or systemic in nature. If you think we have breached a Code obligation you can report this to the BCCC: bankingcode.org.au/customers/ when-a-bank-breaches-the-code. The BCCC is not a complaints resolution body and does not have a role in addressing and remediating individual requests or complaints. There are other mechanisms in place for this, set out in the section above. Resourcing the BCCC The ABA will ensure that the BCCC has sufficient resources and funding to carry out its functions. Complying with requests of the BCCC We will co-operate and comply with all reasonable requests of the BCCC in the performance of its monitoring and investigative activities. For more information on the BCCC visit bankingcode.org.au 8 | ausbanking.org.au
ABA industry guidelines and protocols The ABA publishes and maintains industry guidelines and protocols on some Code related matters. These may assist industry in understanding or interpreting aspects of the Banking Code. The guidelines are intended to promote good practice and may assist members to trial new approaches to support customers. They can serve as a flexible tool for the ABA and its members to respond to emerging matters quickly, whether by drafting a new Industry Guideline or amending an existing Industry Guideline. Unless expressly stated otherwise in the Code, these industry guidelines and protocols do not form part of the Code. ABA industry guidelines and protocols can be found at: www.ausbanking.org.au/resources. Banking Code of Practice | 9
This page and the following pages of this document form the Code. Where the Code makes reference to obligations under the law or regulatory guides, the obligations referred to are not incorporated into the Code or as terms of your contract unless expressly stated. Those obligations may be enforceable separately under relevant legislation. The introduction, including the guiding principles, also does not form part of the Code. We will promote the Code and make sure that copies of the Code are available and accessible. We will arrange for the Code to be independently reviewed at intervals of no more than 5 years after completion of the previous review. Any independent review will involve consultation with the public, including consumer representatives, Small Business organisations and other stakeholders. The Code The ABA and its member banks may also arrange for the Code to be: • independently reviewed sooner, as necessary; or • reviewed and amended to respond to emerging requirements, as necessary. It is a condition of ABA membership that member banks with a retail presence in Australia sign up to the Code. Banks that have adopted the Code are listed on the ABA website: www.ausbanking.org.au/banking-code 10 | ausbanking.org.au
PART A Our Dealings with you under the code A1 Who the Code applies to and how Who the Code applies to 1. The Code applies to you if, at the time we provide the Banking Service or information, you are: a) our customer or a prospective customer, and you are either: i. an individual, who is not treated as a Business under the Code; ii. a Small Business; or b) an individual who is a Guarantor, or a prospective Guarantor, of a customer or prospective customer referred to in subparagraph (a) above. The Code forms part of our Banking Services and guarantees 2. Our written Terms and Conditions for all Banking Services and guarantees to which the Code applies will include a statement to the effect that the relevant provisions of the Code apply to that Banking Service or guarantee. 3. The Terms and Conditions referred to above need not set out those provisions. Banking Code of Practice | 11
A2 Our relationship with you How we will comply with the Code 4. If the Code imposes an obligation on us that is in addition to obligations applying under a relevant law, then we will comply with the Code unless doing so would lead us to breach the law, or relevant regulatory obligation or guidance. 5. We will do all things necessary to ensure that Banking Services provided by us under the Code are provided efficiently, honestly and fairly. This is the same standard of behaviour that applies to us where applicable under section 912A(1)(a) of the Corporations Act and section 47(1)(a) of the National Consumer Credit Protection Act. BCCC Charter 6. We are bound by our obligations in the BCCC Charter, including but not limited to those referred to in the Introduction. Trained and competent staff 7. We will make sure that our staff and our representatives are trained so that they: a) can competently do their work; b) understand the Code and how to comply with it when they are providing Banking Services to you; and c) treat our diverse customers, vulnerable customers and customers who appear to be vulnerable with sensitivity, respect and compassion. Customer Advocate 8. We will have a Customer Advocate in our bank to help facilitate fair customer outcomes and minimise the likelihood of future problems. The Australian Banking Association’s guiding principles for Customer Advocates are available at: www.ausbanking.org.au/resources. Branch Closure Support Protocol 9. We will comply with the ABA Branch Closure Support Protocol when closing a branch. The protocol outlines certain commitments to individuals and Small Businesses in the event of a branch closure. This protocol is available at: www.ausbanking.org.au/resources. A3 Communicating with you Responding to your request for information 10. We will communicate with you in a timely manner, and we will give you information that is useful and clear. This includes information about our products and services so you can make an informed decision about which product or service is suitable for you. 11. If you ask us for advice on any of our Banking Services, then we will provide it to you through staff who are authorised and trained to give you that advice. Alternatively, we may suggest you see someone else who can provide independent advice, such as a lawyer, accountant, financial adviser or financial counsellor. How we will communicate with you 12. Anything that we are required to give to you under this Code may be given to you: a) in person, writing, electronically, by telephone or video conference; b) by telling you that the information is available on a website or other electronic forum; or c) as otherwise agreed with you. However, if this Code specifies the method of communication, then we will comply with that method. 13. Where this Code requires us to communicate in writing, we may do so through electronic communications or printed communications. What information we will give you Terms and Conditions, Fees and Charges 14. If you are entering into a contract for a Banking Service with us, then we will give you the contract Terms and Conditions before, or when, the contract is made. The contract Terms and Conditions may be in separate documents. 15. The documents in paragraph 14 will clearly set out: a) details of fees and charges, their amounts (if ascertainable), and how often they are debited; b) any interest rate that applies, how and when different interest rates may apply, the method by which interest is calculated, and when interest will be credited or debited; 12 | ausbanking.org.au
c) how often we give you statements of account; d) how we may change fees, charges, interest or other Terms and Conditions, and how we will notify you of these changes; e) for a Loan, whether the Loan is repayable on demand; and f) a statement that information on current standard fees, charges and any interest rates is available on request. 16. Our Terms and Conditions will be distinguishable from our marketing material. Specific information 17. If the following information applies to your Banking Service, we will give you that information in, or with, our contract: a) any minimum balance requirement; b) any restriction on depositing money, or withdrawing money, from a relevant account; c) repayment details; and d) how we will process your request to cancel a direct debit. 18. Our Terms and Conditions for a term deposit account will contain the following specific information: a) how we will pay interest and repay the principal to you; b) how funds may be dealt with at maturity; and c) details of any fee, charge or change in an interest rate resulting from a withdrawal in advance of maturity. 19. If we provide you with cheque access, then we will make available in the relevant Terms and Conditions or otherwise provide information about cheques, including information on clearing, stopping and dishonouring cheques. 20. If we give you a foreign exchange service (other than by credit card, debit card, or travellers’ cheque), then we will give you: a) details of the applicable exchange rates and commission charges (to the extent ascertainable) or alternatively details about how to find that information; and b) an indication of when any money you send overseas would normally arrive at the destination. 21. If you have a Loan and we have a Security (such as a mortgage) over your primary place of residence or a residential investment property you own, we will remind you at least once a year of your obligations to insure that property. Our reminder will include: a) a statement that you should check with your insurer about cover; and b) a reference to ASIC’s Moneysmart website moneysmart.gov.au for information on property insurance. Requesting copies of documents 22. We will, within 30 Days of your request, give you a copy of your documents in our possession including: a) a contract (including Terms and Conditions, Standard Fees and Charges and interest rates); b) any mortgage or other Security document; c) a statement of account; and d) any notice we previously gave to you which is relevant to us exercising our rights. 23. However, we do not have to give you a copy of either of the following documents under paragraph 22: a) a notice requiring you to take action if you ask for the copy more than two years after the contract to which the notice relates was discharged or ended; or b) a statement of account within three months after we gave you a copy of the same statement of account. 24. We may charge you a reasonable fee for providing you with a copy of a document under this Code. However, in certain circumstances, we may waive or refund that fee. 25. We may charge you a fee for hard copy statements that are not repeat statements (e.g. out of cycle statements). If you tell us, and we are reasonably satisfied that you do not have access to electronic statements, then we will waive or refund that fee. 26. If we approve your Loan, and it is regulated under the National Consumer Credit Protection Act, we will let you know that you can obtain our assessment about whether the Loan is not unsuitable for you. Banking Code of Practice | 13
Statements of account When we will give you statements for your deposit account 27. At least every six months, or more frequently if you ask, we will give you an account statement for a deposit account (unless it is a passbook account). When we will give you statements for your Loan or credit account 28. If you are in Default on your Loan account, then we will give you a statement of account or alternative (for example, transaction history) if you ask for it. 29. If you are a Small Business or an individual and the rules in the National Credit Code about statements of account do not apply to your Loan or credit account, then we will give you a statement of transactions on your account as though those rules did apply. 30. However, we do not have to give you the statement referred to in paragraph 29 if the nature of the relevant Banking Service means it is impractical for us to do so. Cost of transaction service fees 31. If you are an individual that is not a Business, we will tell you about a transaction service fee immediately before you incur that fee, if it is practical and reasonable for us to do so. 32. However, it may not be practical or reasonable for us to do so in certain circumstances, for example: a) dishonour fees; b) if the fee is charged based on end of day balance and, therefore, is not necessarily incurred at the time of the transaction (for example, an overdrawn fee based on end of day balance); c) if you are making an online purchase from a third party, using a merchant terminal, or using a third party ATM; or d) break costs, which may be incurred if your transaction makes a prepayment on a fixed rate Loan. When we change our arrangements with you 33. The Terms and Conditions of a Banking Service may allow us to change those Terms and Conditions in certain situations without your agreement where allowable under law, including unfair contract terms laws. 34. Subject to paragraphs 35 to 37 below, we will tell you about any change to our Terms and Conditions as soon as reasonably possible. This includes a change to our Standard Fees and Charges. 35. If we change an interest rate, we will tell you as soon as reasonably possible, but no later than the date of the change, unless we are not able to because the interest rate is calculated according to a money market or some other external reference rate, or a rate otherwise designated as a variable or floating rate. 36. Apart from changes to interest rates or changes to repayments, if we believe a change is unfavourable to you, then we will give you prior notice of at least 30 Days, subject to paragraph 37 below. 37. We may give you a shorter notice period, or no notice, of an unfavourable change if: a) it is reasonable for us to manage a material and immediate risk; or b) there is a change to, or introduction of, a government fee or charge that you pay directly, or indirectly, as part of your Banking Service. In that case, we will tell you about the introduction or change reasonably promptly after the government notifies us (however, we do not have to tell you about it if the government publicises the introduction or change). 38. We will tell you about these changes by one or more of the following methods: a) by advertising in the national, or local, media; b) by giving you written notice (this includes printed or electronic communications such as app notifications, emails, publishing the notice on our website or another platform and directing you to the notice); c) by notifying you in any other way that is permitted by law; or d) through any other notice method agreed with you. 14 | ausbanking.org.au
Closing any of your Banking Services We will give you information about closing your accounts 39. We will give you readily accessible information about how to close your account. You may close your accounts 40. If you want to close your account, then we will enable you to do this quickly and easily. Some products may have a minimum notice period. Closing an account that is in credit 41. If we close an account of yours under its Terms and Conditions that is in credit, we: a) will, if appropriate, give you reasonable notice of the closure; b) will, if appropriate, pay you the amount of the credit balance (for example where we have your payment account details); and c) may charge you an amount that is our reasonable estimate of the costs of closing your account. Keeping your accounts safe and secure We will tell you about safeguarding important items 42. We will tell you to safeguard your payment documents (such as cheques) and Devices (such as debit cards or credit cards). We will tell you when you should tell us if any of those items are lost or misused 43. Our Terms and Conditions set out when you should tell us if any payment documents or Devices are lost or misused. 44. We will tell you about: a) how you can notify us of the loss, theft or misuse; and b) the consequences of you not telling us about the loss, theft or misuse. Banking Code of Practice | 15
PART B Customers B1 Inclusive and accessible banking We believe in inclusive and accessible Banking Services 45. We are committed to providing Banking Services which are inclusive and accessible for all customers. We will take reasonable measures to enhance access to our services for customers including, but not limited to: a) older customers; b) people with disability; c) Aboriginal and Torres Strait Islander customers, including those in remote locations; d) people with limited English; and e) people of diverse sexual orientations, gender identities and sex characteristics including lesbian, gay, bisexual, trans and gender diverse, intersex, queer and asexual people, and people born with an intersex variation. 46. We will work to improve inclusivity and accessibility for our customers including, where appropriate and practicable, organising or referring you to external support free of charge, including: a) interpreter services (for example via qualified interpreters, including Auslan); b) National Relay Services; or c) accessible information (such as enabling the use of screen readers and easy read guides). Where it is not practicable to refer you to external support (for example, where an interpreter is not available), we will let you know of alternative ways we may provide support (for example, rescheduling a call to a time when an interpreter is available) or where you may otherwise receive support. 47. Where our staff are fluent in non-English languages, nothing in paragraph 46 prevents those staff members from conversing with you in those languages. When providing Banking Services to Aboriginal and Torres Strait Islander customers 48. If you tell us you are an Aboriginal or Torres Strait Islander customer, we will take reasonable steps to make our Banking Services accessible to you. We will also: a) tell you about any accounts and services that are relevant to you; b) tell you about any accounts or services that have no or low standard fees, if our enquiries indicate you may be eligible for these and help you transfer to another account you want; and c) help you meet any identification requirements if you do not have access to standard identification documents, by following AUSTRAC’s guidance on identification and verification of Aboriginal and Torres Strait Islander customers. 49. We will provide cultural awareness training to staff who regularly assist Aboriginal and Torres Strait Islander customers and Guarantors. 50. We will also make cultural awareness training available to all other staff. When providing Banking Services to remote customers 51. We will also assist our customers who reside in remote communities (including remote Aboriginal and Torres Strait Islander communities) to access and undertake their banking. B2 Taking extra care with customers who are experiencing vulnerability We will take extra care with customers who are experiencing vulnerability 52. We are committed to taking extra care with customers who are experiencing vulnerability. We recognise that a customer’s circumstances may 16 | ausbanking.org.au
require support and that these circumstances may change over time and in response to particular situations. While all customers may be at risk of experiencing vulnerability, this risk may be increased due to a range of characteristics which may include, but are not limited to: a) age; b) disability; c) mental health conditions; d) cognitive impairment; e) serious medical conditions; f) elder abuse; g) family and/or domestic violence; h) financial abuse; i) Financial Difficulty; j) literacy and/or language barriers including limited English; k) cultural background; l) Aboriginal or Torres Strait Islander customers; m) remote locations; or n) incarcerated persons or persons recently released from incarceration. We encourage you to tell us about your circumstances so that we can work with you in relation to your Banking Service, otherwise we may not find out about your circumstances. 53. If you require extra care and you tell us about your personal or financial circumstances, we will work with you to identify a suitable way for you to access and undertake your banking. 54. When we are providing a Banking Service to customers who are experiencing vulnerability we will: a) be respectful of your need for privacy and confidentiality; b) provide appropriate guidance and referrals intended to help you to maintain, or regain, control of your finances; and c) where appropriate, make it as simple as possible for you to appoint a third-party representative (such as a lawyer or financial counsellor) to deal with us on your behalf. B3 Banking Services for people with low or no income When providing transaction Banking Services to low or no income earners 55. If you are an individual and you tell us that you are a low or no income earner, we will give you information about our accounts that you may be eligible for and may be appropriate to your needs for which: a) Standard Fees and Charges are low; or b) there are no Standard Fees and Charges (if we offer such a product). 56. Our obligation in the previous paragraph applies to you regardless of whether or not you are our customer. We may become aware if you are a low or no income earner only if you tell us about it. If you receive a Commonwealth pension or concession, we will give you information about our low or no fee accounts 57. If you apply for a new transaction account, we will ask you if you have any of the following government cards. If you tell us that you have one of these cards, and the account you enquire about is not a basic bank account or low or no fee account, then we will give you information about any basic bank accounts or transaction or deposit accounts we offer that have low or no Standard Fees and Charges (see paragraph 59): a) a Commonwealth Seniors Health Card; b) a Health Care Card; or c) a Pensioner Concession Card. Basic accounts 58. We may offer ‘basic accounts’, or other kinds of low or no fee transaction accounts. 59. Basic accounts have, at a minimum: a) no account keeping fees; b) free periodic statements (you can choose monthly or longer intervals); c) no minimum deposits (except that, if your government benefit is paid into a bank account of yours, you may be required to have it paid into this account); d) free direct debit facilities; Banking Code of Practice | 17
e) access to your choice of a widely accepted debit payment method (including a debit card) offered by us on your basic bank account at no extra cost; and f) free and unlimited Australian domestic transactions.* *Note that you may be charged for certain ancillary services. For example, bank cheques, telegraphic transfers, or transactions at ATMs operated by third parties. We will raise awareness of basic, low or no fee accounts and give you information about them 60. We will raise awareness of our affordable banking products and services such as basic, low, or no fee accounts, including awareness of who they are designed for. 61. We will give you information that is easily accessible about accounts that have low, or no, Standard Fees and Charges. Special features for basic, low or no fee accounts for Eligible Customers 62. If you are an Eligible Customer and you ask for a basic account, or a low or no fee account, we will offer you one of these accounts that has the special features listed in this paragraph and, if we offer basic accounts, will also have the features listed in paragraph 59. The special features are: a) no Informal Overdrafts (except where it is impossible or reasonably impractical for us to prevent your account from being overdrawn); b) No Dishonour Fees; and c) No Overdrawn Fees. 63. You are not obliged to accept our offer of an account with the special features in paragraph 62. You may request (or we may offer you) other accounts (including other basic, low fee or no fee accounts) which do not have some or all the special features or may have additional features. 64. We may also offer accounts with some or all of the special features in paragraph 62, (and/or the features in paragraph 59), to individuals who are not Eligible Customers under this Part. 65. For the purposes of this Part: ‘Eligible Customer’ means an individual that is not a Business who holds a current government concession card listed in paragraph 57. ‘Informal Overdraft’ means credit we provide when (without your express agreement) we permit you to overdraw your account. ‘No Overdrawn Fees’ means we will not charge a fee where your account falls into debit. However, you may be charged interest on the amount in debit. ‘No Dishonour Fees’ means we will not charge a fee because a debit on a basic, low or no fee account is declined due to insufficient funds in the account. Training for staff about customers eligible for basic, low, or no, fee accounts 66. We will train our staff to help them to recognise a person that may qualify for a basic, low, or no fee account. B4 Lending to individuals The National Consumer Credit Protection Act generally applies to lending to individuals for their personal (non-Business) use. You can refer to that Act to find out more about the protections and information that you may be entitled to under that Act. This Part B4 sets out our additional commitments when we provide a Loan to an individual who is not a Business. Appropriate lending 67. If we are considering providing you with a new Loan, or an increase in a Loan limit, we will exercise the care and skill of a diligent and prudent banker. We will do this by complying with the law. 68. We also owe the above obligation to any Guarantor of a Loan referred to in the above paragraph in assessing the borrower’s ability to repay the Loan. Co-borrowers 69. If you are an individual applying for a Loan, or an increase to a Loan limit, in your personal capacity (i.e., not as trustee, director or co-borrower with 18 | ausbanking.org.au
a company or as a partner in a partnership or jointventure arrangement), paragraphs 70 to 72 apply to you. 70. If, on the information that you have provided to us in the course of applying for this Loan, you will not receive a substantial benefit from the Loan, we will not approve you as a co-borrower unless we: a) have taken reasonable steps to ensure that you understand the risks associated with entering into the Loan, and understand the difference between being a co-borrower and a Guarantor; b) have taken into account the reasons why you want to be a co-borrower; and c) are satisfied that you are not experiencing financial abuse. 71. A substantial benefit includes where: a) you acquire a reasonably proportionate legal or equitable interest in assets purchased with the Loan funds; or b) a reasonable portion of the Loan funds are used to repay your debts, or other obligations owed by you. 72. You may end your liability under the Loan by giving us a written request to do so in the following circumstances: a) where credit has not been provided or relied upon by any co-borrower; or b) for any future advances under the Loan, where we can terminate any obligation we have to extend further credit to any other co-borrower under the same Loan. Lenders mortgage insurance 73. We may require you to pay for lenders mortgage insurance in connection with a Loan you have. If we do this, we will give you a fact sheet about lenders mortgage insurance. The fact sheet will contain information outlining the key policy features. 74. We will not charge you more for lenders mortgage insurance than the actual cost we incur for that policy. We will not receive a commission on your lenders mortgage insurance policy. 75. Depending on the terms of the lenders mortgage insurance policy, if your Loan is repaid or refinanced before the end of the policy, then you may be entitled to a refund of part of the fee or charge you have paid. We will explain this to you in the fact sheet. B5 Lending to Small Business This Part B5 sets out our specific commitments to Small Businesses in relation to providing Loans. Any reference to “you” or “your” in this Part B5 means “Small Business and any reference to “guarantor” means any guarantor of a Small Business, and is not limited to a “Guarantor” (as defined in Part E). Helping a Small Business when it applies for a Loan 76. We will tell you how to apply for a Loan, including the following: a) the information we require; and b) after we have received the information we have requested, how long before we are likely to make a decision. Assessing a Small Business Loan application Appropriate lending 77. If we are considering providing you with a new Loan, or an increase in a Loan limit, we will exercise the care and skill of a diligent and prudent banker. 78. When assessing whether you can repay the Loan, we will do so by considering the appropriate circumstances reasonably known to us about one or both of your: a) financial position; or b) account conduct. Where relevant, we may also take into account your projected future cash flows. We will not ask a third party (such as your accountant) to certify that you can repay the Loan. Where reasonable to do so, we may rely on the financial resources of third parties available to you, provided that the third party has a connection to you (that is, to the Small Business). For example, where the third party is a Related Entity of yours (including but not limited to your directors, shareholders, trustees, beneficiaries or related body corporates), or is a partner, joint venturer, or guarantor of yours. 79. We also owe an obligation to any Guarantor of the Loan to comply with paragraph 78 in assessing the borrower’s ability to repay the Loan. Documents we will give you 80. Before you accept a Loan offer, we will give you a plain English document clearly setting out the key general Banking Code of Practice | 19
Terms and Conditions of the Loan. This is in addition to any documents required under this Code and may be a separate document or part of the Loan document. Where we decide not to approve your Loan 81. If we decide not to approve a Loan to you, we will tell you the general reason why, unless it is reasonable for us not to do so. When can we enforce a Loan against a Small Business for non-payment? For special conditions about other Defaults, see paragraphs 86 to 92. How much notice will we give a Small Business before enforcing a Loan for non-payment? 82. If you have not met a Loan payment obligation under your Loan(s) with us, we will give you no less than 30 Days’ notice of the payment failure before we make a demand for full repayment or take Enforcement Proceedings in relation to your Loan(s), unless paragraph 84 applies. 83. We will not require full repayment or take Enforcement Proceedings for non-payment where: a) the overdue amount is paid during the notice period referred to in paragraph 82; and b) if during that notice period a subsequent payment failure has occurred and that further overdue amount is also paid during that notice period. However, we may still rely on another Default that is not a payment Default when permitted under paragraphs 86 to 92. 84. We may give you a shorter notice period, or no notice, for a payment failure if: a) you or a guarantor is insolvent, goes into bankruptcy, voluntary administration, other insolvency process or arrangement, or no longer has legal capacity; or b) it is reasonable for us to do so to manage a material and immediate risk relating to the nature of the relevant Default, your particular circumstances, or the value of the Security. 85. If you have an overdraft or on-demand facility, we may not be required to give you any notice when we require repayment, but if a failure to repay that facility on demand also constitutes a Default under another Loan with us, we will comply with this Part if we enforce that other Loan based on that Default. Specific events of other Defaults Paragraphs 82 to 85 deal with payment Defaults. The following paragraphs 86 to 92 deal with other Defaults in standard form Small Business Loans. Loan Terms and Conditions 86. Our Loan Terms and Conditions will specify how and when we can enforce a Loan against you for Defaults other than payment Defaults. Enforcement of Small Business Loans for non-monetary Defaults 87. For Defaults other than payment Defaults, we will not take action against you unless your Default is one of the following and paragraph 90 permits action in relation to that Default: a) you or a guarantor is insolvent, goes into bankruptcy, voluntary administration, other insolvency process or arrangement, or no longer has legal capacity; b) another creditor brings Enforcement Proceedings against you or a guarantor or against your or their assets; c) early repayment is required under a separate financing arrangement you or a guarantor has with us; d) Default Based Action is taken by us under a separate financing arrangement against you or a guarantor, due to an event of Default which is described in this Part; e) we believe on reasonable grounds that you or a guarantor has not complied with the law or any requirement of a statutory authority, or it becomes unlawful for you or us to continue with the Loan; f) you or a guarantor gives us information or makes a representation or warranty to us which is materially incorrect or misleading (including by omission); g) you use the Loan for a purpose not approved by us; h) your assets or a guarantor’s assets are dealt with, or attempted to be dealt with in breach of the Loan, or any Security or other agreement with us without our consent; i) you or a guarantor do not provide financial information required by your agreement with us; j) you or a guarantor do not maintain a licence or permit necessary to conduct your Business; 20 | ausbanking.org.au
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k) you or a guarantor do not maintain insurance required by your agreement with us; l) legal or beneficial ownership, or management control of a borrower or guarantor or their Business changes without our consent; or m) status, capacity or composition of you or a guarantor changes without our consent. Nothing in this paragraph prevents us from taking action under paragraphs 82 to 85 or in relation to Defaults arising under covenants permitted by paragraph 91. What we will do before we take Default Based Action Remedying your Default 88. Where your Default is identified in paragraph 87(a) to (m), we will give you: a) a notice specifying the grounds on which we consider there is a Default; and b) no less than 30 Days’ notice of the Default (unless paragraph 89 applies) to remedy your Default where it is able to be remedied and notify you of this time period. 89. We may give you a shorter notice period, or no notice, if: a) you or a guarantor is insolvent, goes into bankruptcy, voluntary administration, other insolvency process or arrangement, or no longer has legal capacity; or b) it is reasonable for us to do so to manage a material and immediate risk relating to the nature of the relevant Default, your particular circumstances, or the value of the Security. Material impact 90. We will only act on a specific event of Default identified in paragraph 87(a) to (m), if the event by its nature is material, or we reasonably consider the event has had, or is likely to have, a material impact on: a) you or your guarantor’s ability to meet your or their financial obligations to us (or our ability to assess this); b) our Security risk (or our ability to assess this); or c) our legal or reputation risk where paragraph 87(e), (f) or (g) applies. Specialised Small Business Loans 91. For the following types of Small Business standard form Loans, we may include financial indicator covenants or special covenants tailored to the particular nature of these Loans as a trigger for Default Based Action: a) Loans for property development; or b) Loans for specialised lending transactions, which because of their nature, require additional covenants as a way of banks managing their risks, including margin lending, Loans to selfmanaged superannuation funds, bailment, invoice discounting, construction finance, foreign currency Loans and tailored cash flow lending. General material adverse change clauses 92. We will not include an event of Default based on unspecified material adverse changes in any standard form Small Business Loan contract. When we decide not to extend a Loan How much notice will we give you before the end of a Loan 93. If you are not in Default, and under the Loan contract the principal owing is not to be fully repaid at the end of its scheduled term by regular periodic repayments, we will give you notice of our decision not to extend your Loan, at least 3 months before you need to repay your Loan in full. 94. If we decide to extend or refinance your Loan, we are not required to do so on the same terms. When we appoint external property valuers, investigative accountants and insolvency practitioners When using external property valuers, we will be fair and transparent 95. Our processes in relation to external expert valuations will be fair and transparent. 96. Our communication will be clear, and we will explain the purpose of the valuation to you. When we will provide you with a copy of a valuation 97. Where we have received a valuation of a commercial or agricultural real property which you have paid for, we will provide you with a copy of that valuation and the related valuer instruction (except where 22 | ausbanking.org.au
Enforcement Proceedings have commenced). We may require you to acknowledge in writing that you accept our reasonable limitations on your use of the valuation before we provide it to you. 98. We will only appoint appropriately qualified and experienced valuers who are members of professional organisations which abide by a similar code of practice. Appointing investigating accountants and insolvency practitioners (including voluntary administrators) 99. We will act fairly when using investigative accountants and insolvency practitioners, and will ethically manage potential conflicts of interest when appointing receivers who have been investigating accountants for a Small Business, for example: a) We will only appoint qualified practitioners who are members of relevant professional organisations with appropriate codes of conduct. b) We will require additional internal oversight of the appointment of investigating accountants as receivers, to ensure that the decision is necessary and to review the circumstances leading to the appointment. c) If the relationship between you and the investigating accountant has deteriorated (for example has become unworkable), we will consider the appointment of an alternative qualified practitioner. B6 Guaranteeing a Loan When this part applies 100. If you are a Guarantor for a Loan that we give to another individual or Small Business, and this Code applies to the Loan, then this part of the Code applies to your guarantee and/or indemnity. 101. Under this part of the Code, we must give you information and follow certain processes designed to help you understand the financial risks of giving a guarantee and to decide whether you choose to accept those risks. However, you must make your own assessment of whether you choose to enter a guarantee. You should consider seeking independent legal and financial advice. Limiting liability under the guarantee 102. Your guarantee will be limited to: a) a specific amount and/or category of amounts such as all amounts owing under a specific Loan, plus other liabilities and amounts as described in the guarantee (for example, interest and recovery costs); or b) the value of a specified property or other assets under a specified mortgage or other Security at the time of recovery. What we will tell and give you Notice to you 103. The Terms and Conditions of the guarantee will contain a prominent notice that: a) you should seek independent legal and financial advice; b) you can refuse to sign the guarantee; c) there are financial risks involved; d) you can limit your liability in accordance with this Code or as allowed by law; e) you can request information about the transaction or Loan; and f) if applicable, that the guarantee may cover future credit facilities and variations of the existing Loan. We will also include a warning notice that appears directly above the place where you sign the guarantee (substantially in the form required by section 55 of the National Credit Code and detailed in Form 8 of the National Consumer Credit Protection Regulations 2010 (Cth) and consistent with this Code). 104. We will tell you: a) about any notice of demand we have made on the borrower for the guaranteed Loan, or any Loan the borrower has (or has had) with us, within the previous two years; and b) if any existing Loan we have given the borrower will be cancelled if the guarantee is not provided. This paragraph does not apply if you are a Commercial Asset Financing Guarantor, Sole Director Guarantor, Trustee Guarantor or Partnership Guarantor. Banking Code of Practice | 23
Guarantee documents 105. We will give you a copy of the following documents and/or information in relation to the borrower: a) the proposed Loan contract; b) a list of any related Security contracts; c) any related credit report from a credit reporting body; d) any current credit-related insurance contract that is in our possession; e) any financial accounts or statement of financial position the borrower has given us in the previous two years for the purposes of the guaranteed Loan; f) the latest statement of account relating to the Loan for a period in which a notice of demand was made by us within the last two years; and g) other information we have about the guaranteed Loan that you reasonably request — but we do not have to give you our internal opinions. This paragraph does not apply if you are a Commercial Asset Financing Guarantor, Sole Director Guarantor, Trustee Guarantor or Partnership Guarantor. 106. If we approve the Loan being guaranteed by you, we will let you know that you can request a copy of our assessment about whether the Loan is not unsuitable for the borrower where regulated under the National Consumer Credit Protection Act, free of charge. 107. We will give the guarantee documents directly to you or your representative. We will not give the guarantee documents to the borrower, or to someone acting on behalf of the borrower, to arrange for you to sign the guarantee. This paragraph does not apply if you are a Commercial Asset Financing Guarantor, Sole Director Guarantor, Trustee Guarantor or Partnership Guarantor. 108. If you are a Director Guarantor (other than a Sole Director Guarantor) we will tell you that you have the right to receive the documents in paragraphs 103 to 105 and that these documents contain important information that may affect your decision to give a guarantee. You may choose not to receive some or all of the documents and we will not influence your choice. Before accepting a guarantee 109. Before we accept your guarantee, we will take reasonable steps to ensure that a meeting is held with you either in person or via video conference, phone, or some other means to discuss you being a Guarantor. 110. We will take reasonable steps to ensure that the borrower is not, to our knowledge, present at the time of the meeting referred to in paragraph 109. Where the meeting is not in person, this will be done by having you confirm that the borrower is not present, and if the meeting is via video conference, we will also ensure that the borrower is not visible on screen. 111. Paragraphs 109 and 110 do not apply if: a) you or your lawyer confirm to us that you have received independent legal advice about the guarantee; b) you are a Director Guarantor, Commercial Asset Financing Guarantor, Sole Director Guarantor, Trustee Guarantor, Partnership Guarantor or Vehicle Asset Financing Guarantor; or c) you are accepting an extension of the guarantee. Signing your guarantee When we can accept your guarantee 112. We will not accept a guarantee from you until the third day after you have been given the information provided at paragraphs 103 to 105. 113. However, we can accept the guarantee earlier if: a) you or your lawyer confirm to us that you have received independent legal advice about the guarantee; b) you are accepting an extension of the guarantee; c) you are a Commercial Asset Financing Guarantor, Sole Director Guarantor, Trustee Guarantor, Partnership Guarantor or Vehicle Asset Financing Guarantor; or d) you are a Director Guarantor and you choose to sign and deliver the guarantee earlier. We will not influence your choice. 114. If we attend the signing of the guarantee, we will ensure that you sign the guarantee in the absence of the borrower. Where the signing is via video 24 | ausbanking.org.au
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