Australia: Revised Code of Banking Practice (COBP) is now in place


The revised Code of Banking Practice (COBP) was released by the Australian Bankers' Association (ABA) on 31 January 2013 together with a Code Compliance Monitoring Committee Mandate (CCMC Mandate). The revised COBP follows a review of the 2004 version of the COBP by an independent reviewer in 2007-2008 and an extensive consultation process by ABA. The commencement date for the revised COBP is 1 February 2014.

Revised Code of Banking Practice - 2013

The COBP is a voluntary code which is contractually binding on banks that have subscribed to it and provides minimum standards which banks agree to follow when dealing with personal (individual) and small business customers and their individual guarantors. The revised COBP will apply to banking services (such as deposit products, card facilities, electronic banking facilities and credit facilities) and personal guarantees covered by the revised COBP from 1 February 2014 and some pre-existing banking services and personal guarantees under its transitional provisions. The revised COBP complements the National Credit Code and the ePayments Code.

In the ABA's media release, the Chief Executive of the ABA, Mr Steven Münchenberg, said that new provisions have been added to the COBP, especially to provide additional support for those in the community who need it most. Banks are committed to acting fairly, responsibly and transparently and the revised COBP reinforces these industry values.
The significant changes made by the revised COBP include:

  1. New provisions for customers in remote Indigenous communities, including:
    • Making relevant information about banking services accessible;
    • Providing details of accounts which may be suitable to the customers' needs (which may include details of no or low fees accounts) at the customers' request;
    • Providing assistance to customers to meet identification requirements;
    • Providing appropriately training relevant staff to be culturally aware; and
    • Considering publicly-announced key Commonwealth, State and Territory government programs such as income management programs that may be relevant in providing banking services to those customers.
  1. A commitment to send customers with a mortgage over their a primary place of residence or residential investment property an annual reminder about their property insurance obligations – the reminder will also include a general statement to make inquiries with the insurer about the insurance cover and a reference to ASIC's MoneySmart website for information on property insurance.
  2. A commitment to provide information about no- or low-fee accounts to customers if the bank becomes aware the customer has a Commonwealth concession card, such as a Seniors Health Card, Health Care Card or Pensioner Concession Card (this applies to both existing and prospective customers).
  3. A commitment to give a reasonable period of written notice (at least 10 business days) before making any necessary materially adverse changes to a small business customer's terms and conditions, unless a shorter notice period is considered necessary for the bank to avoid or reduce an increase in credit risk.
  4. Clarification that, in addition to credit card transactions, chargeback rights exist for disputed transactions on debit cards, including debit transactions made under recurrent payment arrangements.
  5. Expanded financial hardship provisions. Banks will need to be more alert to people who may be in financial difficulty in meeting their repayments. Banks must respond promptly to requests for assistance, inform customers in writing of their decision whether to provide assistance if the customers are in financial difficulty, and give reasons for their decision. Banks may not require customers to apply for early release of superannuation benefits to repay the whole or any part of the customers' debts and must ensure that bank staff are well trained in understanding the bank's financial hardship commitments.
  6. A commitment not to combine accounts or assign the customer's debt (except as part of a funding arrangement such as securisation or the issue of covered bonds) when a bank is actively considering whether a customer is in financial difficulty.
  7. A commitment that banks and their collection agents will comply with the current version of ACCC's Debt Collection Guideline: for Collectors and Creditors. They must take reasonable steps to ensure that the banks' representatives comply the guideline and will only sell debts to third parties that agree to comply with the guideline.
  8. A revised electronic communications provision that allows banks to provide electronic communications in accordance with the relevant statutory electronic communication regime or in a manner that is consistent with the requirements of the ePayments Code, as applicable.

The next independent review of the Code is required in 2019 (5 years after the commencement date).

The revised Code will apply when it is adopted by a subscribing bank. All current subscribers to the 2004 COBP need to adopt the revised COBP by 1 February 2014.

CCMC Mandate

The CCMC Mandate is made pursuant to the COBP. Together with the COBP, this mandate sets out the terms to which the subscribers have agreed and that govern the functions and operations of the Code Compliance Monitoring Committee (CCMC).
The CCMC is established:

  • to investigate, and make a determination on, any allegation from any person that a subscriber has breached the COBP;
  • to monitor a subscriber's compliance with the COBP; and
  • to monitor any other aspects of the COBP that are referred to the CCMC by the ABA.

What can we do for your business?

We have extensive experience in assisting banks to comply with the requirements of the various versions of the COBP, including reviewing and updating terms and conditions for banking services and also in providing advice on whether the banks' procedures, processes and policies comply with the COBP. Please contact us if you require our assistance in your compliance with the requirements of the revised COBP. Banks have 12 months to make changes to their systems, processes, documentation or training to ensure they are going to be compliant with the revised COBP by 1 February 2014.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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