- 17 Jul, 2020

ABA makes temporary changes to the Banking Code of Practice

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The Australian Banking Association (ABA) has made temporary changes to the Banking Code of Practice in response to the economic impacts of COVID-19.  These changes were amended on 1 July 2020.

The amendments, made in the form of a special note, encourages increased lenience when it comes to the timing requirements set out by the code for complaint mechanisms as well as increased flexibility when it comes to loans.

The ABA has said in a media release that the changes “reflect the fact that the COVID-19 pandemic may temporarily affect the provision of banking services.”

Related: Moving to a digital world post-COVID

“The changes acknowledge that… banks are dealing with very high volumes of customers in distressed circumstances and operating in very uncertain economic conditions,” the ABA said.

The main objective of the amended code is to increase the flow of credit to small and family businesses.

According to the Australian Bureau of Statistics (ABS),  70% of businesses operating under modified circumstances sought external advice in response to COVID-19.

49% of all businesses relied on private organisations such as banks for such external advice and assistance.  

This has been reflected by the fact that credit growth in the private sector reached a 13 year high in March 2020, increasing by 1.1%  as a result of increased lending to businesses.

Anna Bligh, CEO of the ABA, believes that it is the banking industry will “support  the Australian Government, the economy and the community as we recover from the coronavirus pandemic.” 

The big four banks as well as other lenders such as Macquarie Bank, Bankwest and ING have all subscribed to the code which came into action as of 1 July 2020 and have implemented various changes accordingly.

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Commonwealth Bank

Commonwealth bank has acknowledged the ABA’s changes and has implemented a range of measures to make sure all services are “accessible and easy to understand.”

The obligations of their staff under the code of practice is detailed in  ‘better-banking  book’ which was created with respect to the code.

The bank had reportedly provided $555 million in Small and Medium Sized business loans by May, which is an example of the way banks have helped to achieve the increased flow of credit to businesses encouraged by the ABA.  

In response to COVID-19. CEO Matt Comyn has remained committed to providing “industry leading support for customers and businesses.”

Commonwealth bank has offered loan deferrals, reduced repayments and increased it’s Financial Assistance Solutions team to a group of 1500 staff to assist customers in need.

“This next phase of our support reinforces the strong collaboration and effective cooperation between federal and state governments, regulators and the banking industry which has allowed so much to be achieved in such a short time,” said CEO Matt Comyn in a media release.

Related: CBA to move mortgagors to minimum repayments

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Westpac

Following the 2018 Sedgewick review, Westpac pledged to focus more on adhering to the banking code of practice.

Providing high quality customer service and accessibility are principles that are at the crux of the banking code of conduct.

These values have been reflected in Westpac’s recent implementation of open banking in July of 2020.

“Enhanced data sharing will give customers more confidence they are getting the best deal, and help make it easier to find the best value service that meets their needs,” said Westpac in a media release.

 The ABA’s focus on small business has also been reflected in Westpac’s loan deferrals scheme for small businesses as well as the establishment of a team of specialists to assists these businesses.

“In discussion with the industry and regulators, we will be making changes to allow more time and breathing space for customers who aren’t in a position to return to full payments again from October,” said Westpac in a media release.

This is good news for customers who aren’t financially ready to resume their normal repayments as Westpac will be allowing certain customers to adjust their loans accordingly to their needs.

Related: Open banking officially launched

NAB

NAB has continued their loan deferral scheme and is enhancing their  liaison between bankers and customers as a result of discussions with the ABA and APRA.

“We’re working closely with regulators, the government and industry to support our customers to the other side of this crisis,” said CEO Ross McEwan in a media release.

Customers may be able to extend the period of their loan deferral for up to four months as part of this scheme if they are assessed and deemed eligible.

The scheme has proved popular, with over 90,000 customers making home loan deferrals and over 39,000 making business loan deferrals.

The bank will additionally be establishing a team of 50 banks and advisers with the hopes of bolstering their ‘client-first ethos’.

Related:How to unfreeze your mortgage repayments

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ANZ

ANZ announced at the beginning of July that they will be increasing their support for customers, providing a more customer-oriented and ethical approach.

 “Our primary focus through COVID-19 has been to do all we can to help our customers manage the economic impact of the pandemic.”  Said ANZ CEO Shayne Elliot in a media release. 

“This is about getting additional time to manage an orderly transition and we’ve been working hard with the rest of the industry, our regulators and the Government” he said.

This has taken shape in the form of loan deferrals and allowing increased flexibility when it comes to the restructuring of loans.  

The all comes at a time where ANZ has reportedly seen their customer’s confidence decline by 0.5 percent  in the past week.

It is hoped that all these changes will enable customers to feel more adequately supported and will restore the confidence that has been lost by many customers.  

Youn might also like: ABA Confirms COVID-19 Repayment Holidays Won’t Impact Credit History

Words by Vidya Kathirgamalingam

Sources:

Senate inquiry into the Australian Government’s response to the COVID-19 pandemic

ABS Business Indicators, Business Impacts of COVID-19, June 2020 

Banking Code of Practice

AFCA receives more than 80,000 complaints in FY19/20, nearly 5,000 of which are COVID-19 related

Temporary Changes to code due to COVID-19

Commonwealth Bank Banking Code of Practice

CBA Launches Next Phase of Customer Recovery Support

Westpac Welcomes ABA’s Seventh Progress Report

ANZ Update on COVID Support Package

Consumer confidence falls further

NAB extends vital support options for business and home loan customers

New Advisers and Banks to Bolster NAB’s private client experience

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