Industry codes of conduct can provide additional and stronger protections for consumers. Industry codes are not laws of parliament, but are agreements entered into by members of an industry about the standards and practices they will uphold. Industry codes range from unenforceable voluntary codes to compulsory codes that bind industry members. However, external dispute resolution schemes may see industry codes as good industry practice relevant to decision-making.
The Code of Banking Practice (“Banking Code”) is a voluntary code that sets out standards of good banking practice when banks deal with consumers who are, or may become, their individual and small business customers or guarantors. Nearly all retail banks subscribe to the Banking Code. The Banking Code is on the Australian Banking Association’s website (www.ausbanking.org.au). There is now legal authority that the Banking Code forms part of the bank’s contract with the customer. Therefore, a breach of the Banking Code amounts to a breach of contract. Under the Banking Code, subscribing banks will:
• supply the terms and conditions of any banking services it offers to any person on request (cl 146);
• promptly process instructions to cancel a direct debit authority and complaints about an unauthorised direct debit (without directing or suggesting that the matter should be raised first with the debit user) (cls 135, 136);
• where a customer disputes a credit card transaction, claim a chargeback and not accept a refusal from the relevant bank unless it is made in accordance with the Chargeback Rules (cl 130);
• before offering, giving or increasing an existing credit facility, exercise the care and skill of a diligent and prudent banker in selecting and applying its credit assessment methods and in forming its opinion about the customer’s ability to repay (cl 49);
• try to help a customer overcome their financial difficulties with any credit facility held with the bank, including by developing a repayment plan, communicating with the customer’s financial counsellor, informing the customer about the hardship variation provisions in the NCC (if applicable) and confirming the main details of any hardship assistance it provides in writing (cls 167–178);
• not accept a person as a co-debtor under a credit facility unless the bank takes reasonable steps to ensure the borrower understands the risk of being a co-debtor, considers why the borrower wants to be a co-debtor and is satisfied there is no financial abuse (cl 54);
• give certain information to a prospective guarantor about the financial situation of the debtor whose loan is being guaranteed (cl 97);
• not ask a prospective guarantor to sign a guarantee unless it has allowed them three days to consider the information referred to above (unless the prospective debtor has received independent legal advice after receiving the information, or the credit relates to some business guarantees) (cls 107, 108);
• not give the guarantee instrument to the debtor or their representative to arrange the signing (cl 109);
• generally ensure the guarantee is signed in the absence of the debtor where the guarantee is signed at the bank (cl 110);
• comply, and take all reasonable steps to ensure their collection agents also comply, with the Australian Competition and Consumer Commission and the Australian Securities and Investments Commission’s Debt Collection Guideline for Collectors and Creditors (cl 180);
• not assign a debt while considering a customer’s hardship request or while a customer is complying with an agreed hardship arrangement (cl 184).
Other similar industry codes that may assist consumers include the Mortgage and Finance Association of Australia Code of Practice (whose signatories include mortgage and finance brokers and managers), the Customer Owned Banking Code (formerly the Mutual Banking Code of Practice for credit unions and mutual building societies) and the SEQUAL Code of Conduct (for providers of equity release products, such as reverse mortgages).