Small businesses will be covered for the first time in a new banking code of conduct released today.
The code, reviewed for the first time in nine years, will extend safeguards on standards of practice, disclosure and principles to the small business sector.
The extension comes after academic research and anecdotal evidence shows a high level of dissatisfaction among small businesses with major banks.
To read more about small business dissatisfaction, click
here.
Australian Bankers' Association chief executive David Bell says the review considered submissions from industry and community groups and binds member banks to the detail.
"The ABA member banks agreed it was crucial that the new code be extended to cover small business and the aim was to treat personal customers and small business the same, wherever feasible," Bell says.
"The code is a valuable safeguard for these customers – it will benefit the customer and assist them have a better understanding of the standards the banks will follow in day-to-day banking, complicated financial transactions and even if the customer experiences financial difficulty."
The key aspects of the code commits banks to:
- act fairly and reasonably toward their customers in a consistent and ethical manner
- establish, through the ABA, a consultative forum to take account of community views about banking
- extend the code to cover small business
- submit themselves to independent monitoring of their compliance with the code and accountability for code breaches
- with customers' agreement, to try and help customers suffering financial difficulties with their bank loan, overcome those difficulties
- provide information on chargebacks on a disputed credit card transaction
- ensure staff are trained to competently and efficiently discharge their authorised functions
- ensure the code is promoted and that copies are made readily available
- comply with the ABA's Transaction Services and Branch Closure Protocol
- provide important and relevant information for prospective guarantors before they commit to guaranteeing someone else's debt
- review the code every three years.
The code will come into effect in August next year to allow banks to prepare staff in line with the Financial Services Reform Act which takes effect in March 2004.
For more details on the code and background, visit the ABA
website.