Borrow
ACCC wants to hold banks more accountable
Low-income consumers and drought-affected farmers are set to benefit from an Australian Competition and Consumer Commission (ACCC) proposal to impose conditions on the reviewed Banking Code of Practice.
ACCC wants to hold banks more accountable
Low-income consumers and drought-affected farmers are set to benefit from an Australian Competition and Consumer Commission (ACCC) proposal to impose conditions on the reviewed Banking Code of Practice.
The ACCC said it wants to ensure the revised code will benefit low-income consumers and drought-affected farmers, after the Australian Banking Association (ABA) sought authorisation to amend the banking code following recommendations from the Hayne royal commission.
Banking code changes
It was reported that the ABA’s proposed amendments aim to improve basic bank accounts and low- or no-fee accounts by prohibiting informal overdrafts unless requested by a customer.
Working on behalf of its 23 members, which includes the major banks, the ABA is also proposing that certain bank account types have no minimum deposits, free direct debit facilities, access to a debit card at no extra cost and free unlimited domestic transactions.
The ACCC also noted that ABA’s code change would prevent default interest being charged on agricultural loans in drought-affected areas.
ACCC’s response
The ACCC reported that it believes additional conditions are required to strengthen these changes.
According to ACCC deputy chair Delia Rickard, “the proposed changes to the code should result in public benefits, by giving customers on low incomes better access to affordable banking, and to address a source of significant harm to farmers experiencing drought”.
“While the ACCC strongly supports these objectives, we are proposing to place extra conditions on ABA members to ensure the changes effectively address the royal commission’s recommendations, and in turn actually deliver these public benefits,” she continued.
It was outlined that under the ABA’s proposal, basic bank accounts might still be able to be overdrawn without a customer agreeing in some circumstances, and banks could continue to charge interest at rates approaching 20 per cent on overdrawn amounts.
Ms Rickard commented that “this could lead to low-income customers getting into debt from overdrafts they did not agree to, which is exactly the kind of problem the Hayne royal commission sought to address”.
The ACCC has proposed that one of its conditions of authorisation would not allow interest to be charged in these cases, or would require any such interest charges to be repaid to the customer.
There are also widespread concerns voiced by consumer groups that the ABA’s proposed changes would not require banks to proactively identify existing customers who would be eligible for the accounts, or even to continue to offer a basic bank account at all.
To address such an issue, the ACCC said it is considering proposing conditions that would require banks to proactively identify eligible customers, including through data analysis, and inform these customers of their eligibility for such services.
The ABA would then be required to report to the ACCC on measures taken to offer them fee-free bank accounts and provide analysis on how many customers have taken up such an offer.
Members of the ABA who currently offer a basic banking product will also be required to continue doing so for the period of authorisation.
The ACCC said feedback is invited on the issues, before it delivers a final determination on the code in November 2019.
About the author
About the author
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. ...Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. ...Read more
Banking
Australians' trust in digital providers has decreased in last five years
Australians have little trust in organisations keeping their information secure, but the financial services industry still sits atop the list. ...Read more
Banking
Commonwealth Bank chairman to retire in August
The Commonwealth Bank (CBA) board has announced a successor. ...Read more
Banking
Westpac responds to $113m penalty
The big four bank has responded to the penalty handed down last week. ...Read more
Banking
Westpac ordered to pay $113m for ‘widespread compliance failures’
Westpac has been ordered to pay penalties in the amount of $113 million for widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management ...Read more
Banking
Big bank-backed start-up raises $12.75m
A landmark fundraise by Australia’s biggest banks has secured a war chest of $12.75 million to the sector’s blockchain consortium, Lygon, to bolster its research and development into helping banks...Read more
Wrapping up an eventful 2021
Listen now
What Omicron means for property, and are units right for first-time buyers? What is equity crowdfunding? Are industry super funds tapping into member funds to save their skins?
Listen now
Will housing affordability improve in 2022? Will buy now, pay later become the norm? Why are Aussies staying in failing super products?
Listen now
Who really benefits from crypto ETFs? How will the RBA respond to rising inflation? Could a mandate help address unpaid super?
Listen now
Banking
Banks report $14.4bn profit amid pressure on net interest margins
Australia’s major banks have reported a significant boost to their bottom lines and returns in the first half of the 2022 financial year, signaling sector-wide resilience despite persistent pressure...Read more
Banking
Major banks report rising profits
NAB and ANZ announced their half-year results this week. ...Read more
Banking
Modernisation of direct debit system suffers setback
According to the Reserve Bank (RBA), several major banks will not be able to meet the current timeline for the launch of the PayTo service. ...Read more
Banking
Australians' trust in digital providers has decreased in last five years
Australians have little trust in organisations keeping their information secure, but the financial services industry still sits atop the list. ...Read more
Banking
Commonwealth Bank chairman to retire in August
The Commonwealth Bank (CBA) board has announced a successor. ...Read more
Banking
Westpac responds to $113m penalty
The big four bank has responded to the penalty handed down last week. ...Read more
Banking
Westpac ordered to pay $113m for ‘widespread compliance failures’
Westpac has been ordered to pay penalties in the amount of $113 million for widespread compliance failures across multiple businesses, including Westpac’s banking, superannuation, wealth management ...Read more
Banking
Big bank-backed start-up raises $12.75m
A landmark fundraise by Australia’s biggest banks has secured a war chest of $12.75 million to the sector’s blockchain consortium, Lygon, to bolster its research and development into helping banks...Read more
More articles
Website Notifications
Get notifications in real-time for staying up to date with content that matters to you.
