Consumer groups urge banks to implement recommendations of banking code report

Consumer Groups today welcomed the release of the Independent Khoury Review of the Australian Banking Association’s Code of Banking Practice as an important step in the right direction of improving the way banks work with their customers.

“This report sends a strong message to banks that they need to make some fundamental changes to bridge the yawning trust gap with consumers,” said Karen Cox, Financial Rights Legal Centre Coordinator. “Consumers have had enough of the spin, secrecy, toxic sales driven culture that has led to plummeting levels of respect in the community and increased the difficulties faced by those experiencing financial hardship. The banks have now been given a chance to truly listen to the full and frank advice being provided by the Independent Reviewer and we expect them to act in the best interests of the consumers, the community and ultimately themselves by implementing the recommendations of the report – including seeking ASIC approval for the Code – as soon as possible. I hope the message doesn’t fall on deaf ears.”

The ABA instituted a review of its Code of Banking Practice in mid-2016 to make sure that banks “have the right culture, the right practices and the right behaviours.” Consumer groups contributed a 120 page joint submission outlining consumers’ key concerns with respect to everything from unfair fees and charges, poor financial hardship practices, to dodgy sales and making direct debit cancellations easier.

“The Independent Reviewer has responded to public concern and proposed some sensible reforms,” said Gerard Brody, CEO of the Consumer Action Law Centre. “Consumer groups fully support an overhaul and re-drafting of the code. Changes are aimed at improving credit cards, bank fees, marketing and a sales-at-all-costs culture. Ending the hard cross-sell of add-on insurance through a delayed sales mechanism will prevent people ending up with poor value products that they can’t claim on.”

Other significant recommendations in the Report include:

  • A new obligation prohibiting banks from offering credit card limit increases other than when explicitly requested
  • Making it easier for consumers to lower credit card limits or cancelling them altogether
  • Increasing the number of small businesses and small business facilities to which the Code applies
  • Tighter rules around the promotion and sale of consumer credit insurance including an opt-in and one day delay component
  • Prohibiting high pressure sales tactics when promoting the sale of financial products in banks
  • Tightening up rules and protections for guarantors and joint account holders
  • Building better functionality and process with credit card companies within two years to enable easier customer requests to cancel recurring card payments.
  • Obligations to design banking services in an inclusive way taking into account the special needs of customers including those with a disability
  • Improvements to Code Compliance and Monitoring to prioritise investigations, transparency and support continuous improvement; and
  • Registration of the Code with ASIC.

“The proposal for banks to proactively identify customers at risk of financial difficulty and to offer them assistance is an important reform to help curtail financial disadvantage in Australia,” said Fiona Guthrie, CEO Financial Counselling Australia

Consumer representatives were disappointed by a small number of findings in the report that did not address core concerns of consumers. The recommendation that bank’s only offer credit limits that consumers can pay off within a reasonable time is wishy washy.

The report also side-steps important issues around the nexus between financial hardship and credit reporting.

Erin Turner, Head of Campaigns & Policy at CHOICE stated: “Banks must take steps to better reflect the fact that when a consumer requests a financial difficulty arrangement under the law, they must respond as required by law. Importantly, a financial difficulty arrangement is a change to the contract and the person keeping up their end of the bargain should not be penalised on their credit report. It is critical that this be resolved sooner rather than later to ensure that consumers in financial trouble have sufficient trust to approach their bank for assistance.”


For further information contact Drew MacRae, Policy and Advocacy Officer, Financial Rights Legal Centre on 02 8204 1386

About Financial Rights

The Financial Rights Legal Centre is a community legal centre that specialises in helping consumer’s understand and enforce their financial rights, especially low income and otherwise marginalised or vulnerable consumers. We provide free and independent financial counselling, legal advice and representation to individuals about a broad range of financial issues. We operate the Insurance Law Service which provides advice nationally to consumers about insurance claims and debts to insurance companies. Financial Rights also operates the National Debt Helpline, which helps NSW consumers experiencing financial difficulties. Financial Rights took over 26,000 calls for advice or assistance during the 2015/2016 financial year.


Set up by consumers for consumers, CHOICE is the consumer advocate that provides Australians with information and advice, free from commercial bias. By mobilising Australia’s largest and loudest consumer movement, CHOICE fights to hold industry and government accountable and achieve real change on the issues that matter most. To find out more about CHOICE’s campaign work visit

About Consumer Action

Consumer Action Law Centre is an independent, not-for profit consumer organisation based in Melbourne. We work to advance fairness in consumer markets, particularly for disadvantaged and vulnerable consumers, through financial counselling, legal advice and representation, and policy work and campaigns. Delivering assistance services to Victorian consumers, we have a national reach through our deep expertise in consumer law and policy and direct knowledge of the consumer experience of modern markets.

About Financial Counselling Australia

Financial Counselling Australia is the peak body for financial counsellors. Financial counsellors assist people experiencing financial difficulty by providing information, support and advocacy. Working in not-for-profit community organisations, financial counselling services are free, independent and confidential

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