How the banks’ new code of practice will impact you
Say goodbye to difficult card cancellation, statement fees and nasty interest rate surprises.
The Australian Bankers’ Association (ABA) has submitted its new and improved Banking Code of Practice to the Australian Securities and Investments Commission (ASIC) for approval today. Following an independent review conducted by Phil Khoury earlier this year, the new code of practice was nine months, hundreds of hours and more than 50 meetings in the making.
If approved, it’ll mean a massive shift for individuals, small businesses and guarantors. The new code has been broken into ten key parts, with four new sections addressing small business and another dedicated to making banking easier and more accessible for customers. If you’re a credit card customer, these are the six changes that will impact how you manage your plastic under the new code of practice.
Online credit card cancellation
You will have the option to close your credit card account online, rather than over the phone or in a branch. This will make it much easier for cardholders to switch providers and is something Commonwealth Bank announced it was rolling out in March this year.
Full list of direct debits
It'll also be easier to close your account thanks to new steps involved to change your direct debits. Customers will be able to request a full list of the direct debits and recurring payments made with the account, which can go back as far as 13 months. This will simplify the process of switching your accounts and prevent any default payment fees when you move to a new card.
Interest-free period notifications
If you’re using a credit card with a promotional 0% interest rate or interest-free days, your bank will contact you before the period expires so you’re not hit with a nasty surprise when you start accruing interest. Although this will be a useful way to stay on top of your account, you shouldn’t always rely on the bank telling you when the interest-free offer is going to end. Instead, you should put the offer end date and reminders in your calendar so that you can work on paying down your debt before interest applies.
The banks will also introduce new ways to proactively identify customers who are struggling financially, so they can reach out with alternatives and solutions.
Waived transaction fees
There’s almost nothing more annoying than having to pay a fee to access your own statement period. If you prefer the old school method of getting a paper statement each month, banks will waive or refund statement fees for customers who do not have access to electronic statements.
Transparency for transaction service fees
The banks are also aiming to increase transparency around transaction fees. So, where practical, your bank will inform you about transaction service fees before you incur the cost.
The end of consumer credit card insurance
The code also includes the banks' vow to no longer offer add-on insurance (otherwise known as consumer credit card insurance or CCI) with credit products. CCI was often sold with credit cards, personal loans, home loans and car loans. The insurance is supposed to provide cardholders with financial security if they struggle to meet repayments if they lose their job, become sick, injured or die. However, many issuers came under fire from ASIC in August this year after approving customers for CCI policies without fully disclosing what it was or what it covered.
If approved, the new code will make banking easier and more transparent for customers and businesses alike. Following political pressure on the industry in the last few years, banks volunteered to give the code of practice a face lift in order to rebuild trust with Australian consumers.
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