The new Mutual Banking Code of Practice commenced on 1 January 2014.
ADIs subscribe to the Code by formally signing up to be bound by it. Not all members of the Customer Owned Banking Association are subscribers to the Code.
The changes from the previous Code largely reflect the movements in the regulatory environment. Some of the main changes are summarised below:
- Responsible lending has been added to the Code. There is now a positive obligation for subscribers to act as a responsible lender and to make lending decisions based on responsible lending.
- Specific provisions have been added about credit cards and revolving facilities. Subscribers must not make an unsolicited offer for a credit limit increase in certain circumstances, and must act reasonably in setting a credit limit.
- References to the EFT Code of Conduct have been replaced with ePayments code. The Code assumes that subscribers are also subscribers to the ePayments code.
- A section has been added in requiring subscribers to take into account the special needs of customers, and to tailor services offered for these customers.
- Subscribers must have regard to ASIC regulatory guidance for advertising and online disclosure.
- The recent changes to reverse mortgage provisions in the NCCP Act are now recognised. The Code now contains a summary of the NCCP Act requirements applying to reverse mortgages.
- Subscribers must only use third party service providers after taking steps to ensure that the provider is reputable. The providers must also be regularly reviewed.
How does the Customer Owned Banking Code of Practice vary from the Code of Banking Practice?
The 2013 version of the Code of Banking Practice, which commenced in 2014, is similar to the Customer Owned Banking Code of Practice, but does not include specific provisions about reverse mortgages or require the reputability of third party providers.
COBA members are encouraged to review the Code carefully to ensure compliance before subscribing.