Navigating the new Banking Code of Practice: key changes you need to know

2021 BCOP 

2025 BCOP

Updated Structure

The 2021 BCOP has 10 parts.

The 2025 BCOP has 5 parts.

Conduct Standard

The 2021 BCOP requires member banks to provide services Ba in a 'fair, reasonable and ethical manner.'

The 2025 BCOP requires member banks to act 'efficiently, honestly and fairly.'

This amendment uses language consistent with section 912A(1)(a) of the Corporations Act 2001 (Cth) (Corporations Act), by replicating the general obligation on Australian Financial Services Licensees to act efficiently, honestly and fairly. The Corporations Act obligation is a civil penalty provision, so regulatory consequences, including fines and disqualification orders, may apply if breached.

Review Process

The 2021 BCOP sets out that the Code will be reviewed every 3 years.

The 2025 BCOP sets out that the Code will be reviewed at least every 5 years which is consistent with section 1011AB of the Corporations Act and s238C of the National Consumer Credit Protection Act 2009 (Cth).

Guarantors

The 2021 BCOP does not require member banks to meet with guarantors before accepting the guarantee.

The 2025 BCOP sets out that (subject to some exceptions), before accepting a guarantee, member banks must take reasonable steps to:

• meet with a guarantor either in person or via video conference, phone or some other means, and
• ensure that the borrower is not present at that meeting.

The purpose of this meeting is to provide the prospective guarantor with sufficient information to ensure that they are aware of the risks of the guarantee.

This obligation to meet guarantors does not apply if the guarantor has already received independent legal advice.

Small businesses

The 2021 BCOP sets out that one of the criteria for a small business to be captured is if it has less than $3 million total debt to all credit providers (along with other requirements).

The 2025 BCOP sets out that one of the criteria for a small business to be captured is if it has less than $5 million in total debt (along with other requirements).

The 2021 BCOP requires member banks to rely on the resources of a third party, provided the third party has a connection to the small business when assessing whether a small business can repay a loan.

The 2025 BCOP sets out that member banks may only rely on the financial resources of a third party, provided that the third party has a connection to the small business when assessing whether a small business can repay a loan.

Small businesses and payment defaults

The 2021 BCOP does not have any rules around giving shorter notice for small businesses who default, if a guarantor becomes insolvent.

The 2025 BCOP sets out that member banks may give shorter notice periods for small businesses who fail to make a loan repayment periods if the borrower's guarantor becomes insolvent, bankrupt or no longer has legal capacity.

Financial Difficulty

The 2021 BCOP sets out that 'Financial Difficulty' means customers are unable to repay what they owe and are experiencing difficulty meeting their repayment obligations. This could be as a result of an unexpected event or unforeseen changes outside your control.

The 2025 BCOP introduces a broader definition of 'Financial Difficulty', being defined as a customer's inability/difficulty to meet their current or future repayment obligations due to a number of reasons including:

• illness or injury,
• loss of employment,
• pandemic, or
• natural disaster.

The purpose of this expanded definition is to encourage more customers to seek help in times of distress, before their financial condition irreversible deteriorates.

The 2025 BCOP emphasises that the aim of financial difficulty assistance is to try and restore the customer's position.

Inclusive and accessible banking

The 2021 BCOP requires member banks to be inclusive and accessible for:

• older customers,
• people with a disability,
• Indigenous Australians, including in remote locations, and
• people with limited English.

The 2025 BCOP expands the list of customers and now also includes 'people of diverse sexual orientations, gender identities and sex characteristics including lesbian, gay, bisexual, trans and gender diverse, intersex, queer and asexual people, and people born with an intersex variation'.

Vulnerable customers

The 2021 BCOP requires member banks to take extra care with customers experiencing vulnerability. That is, member banks must take extra care with customers experiencing vulnerability, including:

• age-related impairment,
• cognitive impairment,
• elder abuse,
• family or domestic violence,
• financial abuse,
• mental illness,
• serious illness, and
• any other personal, or financial, circumstance causing significant detriment.

The 2025 BCOP expands the list of characteristics and circumstances that may increase a customer's vulnerability risk to include:

• age,
• disability,
• mental health conditions,
• cognitive impairment,
• serious medical conditions,
• elder abuse,
• family and/or domestic violence,
• financial abuse,
• Financial Difficulty,
• literacy and other language barriers, including limited English,
• cultural background,
• Aboriginal or Torres Strait Islander customers,
• remote locations, and
• incarcerated persons or persons recently released from incarceration.

External support

The 2021 BCOP includes an obligation for member banks to refer customers to external support if appropriate.

The 2025 BCOP includes a new obligation to, where appropriate and practicable, organise and refer customers to external support services to improve their banking service access. This includes:

• interpreter and Auslan services,
• National Relay Services, or
• alternative forms of accessible information like easy read guides.

These services should all be provided free of charge.

The 2021 BCOP does not have a comparable obligation.

The 2025 BCOP introduces a new obligation for member banks to make it simpler for customers to appoint third party representatives, including lawyers or financial counsellors, to assist them in accessing banking services.

Cultural Awareness Training

The 2021 BCOP has an obligation to 'provide cultural awareness training to staff who regularly assist customers in remote Indigenous communities.'

The 2025 BCOP sets out that employees of member banks who regularly assist Aboriginal and Torres Strait customers must regularly attend cultural awareness training. All other member bank employees must also be able to access this training, should they elect to do so.

Terms and conditions

The 2021 BCOP sets out that if a member bank changes its arrangements with a customer, it would tell the customer about these changes either:

• by advertising in the national, or local, media, or
• by giving you written notice.

The 2025 BCOP introduces new methods through which a member bank can notify a customer about a unilateral change to a term or condition of their contract (including changes to standard fees and charges). In addition to the old notification methods, the new notification methods include:

• notifying in any way that is permitted by law, or
• through other notice methods agreed by the customer.

Deceased Estates

The 2021 BCOP sets out that, once notified about a customer's death, a member bank must stop charging fees and act on instructions concerning the deceased‘s account.

The 2025 BCOP sets out new provisions requiring member banks to take reasonable steps to promptly secure any accounts in the name of the deceased (including removing internet and app banking log in credentials and restricting transactions).