New reforms provide big step forward for banking industry and customers

Australia’s banking industry is introducing six new reforms in the space of one week, making it one of the largest regulatory reforms the industry has seen in decades.

The new changes will improve services and strengthen protections for bank customers.

The changes, which all commence this week, are as follows:

• New anti-hawking laws – banks are banned from unsolicited selling (anti-hawking) of financial products to customers who don’t need or want them.
• New add-on insurance laws – banks will follow a cooling-off period between calls or contact for add-on insurance products, to promote informed purchasing decisions and prevent pressure selling.
• New design and distribution obligations – the new obligations mean financial products will be better designed and targeted. This will ensure banks provide the right services to the right customers.
• Faster complaint resolution – customer complaints will need to be resolved faster, with clear reasons provided to the customer for the outcome reached.
• Better reference checking – mortgage brokers and financial advisers will require better reference checking, which should help to ensure consistent practises throughout the industry.
• Increased breach reporting requirements – banks will be required to report much more information about non-compliance and misconduct to regulators. As part of this, banks will need to notify, investigate and resolve cases where customers have fallen victim to poor investment advice.

“Two and a half years ago, the banking industry put its hand up and said we must do better, and looking back now, we have made strong progress.”

ABA CEO Anna Bligh

Action by Australian banks during the pandemic has shown that providing the best solutions and support to customers remains at the centre of what banks do. Throughout COVID-19, banks have deferred the loans of more than one million Australians, including a range of other initiatives to support small and medium sized businesses through these challenging times.

Anna Bligh, Chief Executive Officer at the Australian Banking Association, said this month’s changes provide important protections for customers and represent a major step forward for customers, banks and the conclusion of the Royal Commission into banking, superannuation and financial services.

“The banking industry has come a long way since the Royal Commission and these new changes confirm that customers are at the centre of what Australia’s banks do,” Ms Bligh said.

“Two and a half years ago, the banking industry put its hand up and said we must do better, and looking back now, we have made strong progress.”

Banks have been held to account and have made many changes, including simplifying banking services, repaying customers for overcharging and resolving misconduct issues. Importantly, banks have introduced a new Banking Code of Practice with over 200 binding commitments to increase protections for customers. The Code has strengthened protections for farmers, small business owners, bereaved customers and guarantors.

“The new code has been in place for over two years and is being independently reviewed following feedback from the community, we are committed to continuingly ensure it meets the needs of our customers,” Ms Bligh said.

“Australia’s banks have been able to support businesses, families, individuals, as well as partnering with governments throughout the pandemic. This opportunity has shown Australians that customers come first,” she said.

Anna Bligh