Can the new Code of Practice restore the reputation of the Banks?

Can the new Code of Practice restore the reputation of the Banks?

Aussies everywhere, unless they are in the minority of mattress money hoarders, will likely be happy to know about the initiation of a new banking Code of Practice, approved by the Australian Securities and Investments Commission on Tuesday this week.

The rewrite, which CEO of the Australian Banking Association, Anna Bligh says aims to be more consumer-friendly and transparent, was submitted to ASIC for final approval in December 2017 and will be fully implemented by July 2019. It was originally put forward by ASIC in 2015, prior to the commencement of the royal commission hearings. After the series of scandals uncovered in recent months, Bligh hopes that the new Code will take an important step forward in restoring the reputation of Australia’s banking industry.”

“The new Code will introduce a range of new measures to make banking products easier to understand and more customer focussed”, says Bligh “it represents a stronger commitment to ethical behaviour, responsible lending, greater financial protection and increased transparency.”

Training and care

Under the Code, there will be a commitment to training staff to take better care of vulnerable customers, such as Indigenous customers, people on pensions, and those with disabilities.

Assistance for those on low incomes in getting the right accounts for their circumstances will also be provided; customers in these situations will be made aware of accounts with low or no fees attached.

Customers who are deemed at risk of financial difficulty will also have measures put in place to help them.

More manageable debt

Banks will make it easier to cancel credit cards, inform customers when their interest-free period is ending, and implement more responsible lending conditions, including credit limits that are repayable over a five-year period.

Commitments to reducing the hard sell of products to customers of personal loans, such as insurance, that are unwanted or unnecessary have also been promised.

The new Code could mean good news for potential home owners, as there will no longer be fees and commission on lenders mortgage insurance, and fact sheets on policy features will be provided as standard.

Action to protect the rights of guarantors of loans will also be implemented.

Small business protection

As well as customers, moves are being made to protect the interests of small businesses, such as the simplification of contract jargon, and limits imposed on the conditions of loans of under $3 million. Banks will increase communication with small businesses, giving them more notice when conditions change and being more transparent when using valuers and insolvency practitioners.

Enforcement

“The new Code must have teeth. A key part of that will be ensuring that oversight body, the Banking Code Compliance Committee, has the resources and sanctions it needs to hold the banks to account.” said Consumer Action Law Centre CEO Gerard Brody, “Let’s not forget that many cases at the Hayne Royal Commission have been clear breaches of the old Code that were never enforced.”

The new Code will be under stronger enforcement by the independent Banking Code Compliance Committee, in an attempt to severely limit breaches. The BCCC will be given more power, enabling them to publicly name banks and condemn any breaches and issue formal warnings.

The Code will also be reviewed every three years, as opposed to the previous implementation of a five-yearly review.

Is it enough?

As pointed out by consumer groups, there are gaps in the Code. Some of these include:

  • Debt collection: Recent news had shown that some debt collectors, such as ACM Group, have been found guilty of misconduct; banks have not committed to accountability for debt collectors behaviour.
  • Fees: High fees like overdraft fees and late payment fees on credit cards deal those in hardship the biggest blow, and banks will continue to charge them even under the new Code.
  • Direct debits: Tighter regulations on banks cancel direct debits upon request have not been mentioned under the new Code.
  • Credit Cards: The ABA has imposed a five-year payable credit card debt, but consumer groups believe that this should be reduced to two years.

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Learn more about bank accounts

Can Centrelink access your bank account?

Yes, Centrelink can access your bank account, but only if you give them a reason to. Centrelink uses data-matching software with other federal government agencies to help it crack down on welfare cheats.

This is why it’s important to give true and matching information to all government agencies.

For example, if you report to Centrelink your annual income is $25,000, but at tax time you report your income as $50,000 with the ATO, it’s likely you’ll be ‘red flagged’.

At this point, Centrelink can legally request that your bank hand over your personal bank account details, to review your finances.

In most cases, Centrelink does not have the authority to take money out of your account. You will usually be given written notice to repay the debt.

However, Centrelink can also reduce your benefits until you’ve paid back what you owe. In extreme cases, Centrelink can garnish your wages and assets (including money in your bank account) until your debt is repaid.

How do I close a bank account?

Closing a bank account is one of those tasks that’s easy to put in the too-hard basket. There are quite a few steps involved, some which may require you to hang on the phone for a while.  

Here’s a handy checklist of items to tick off, so the job gets done quicker. If you don’t do your banking online, the following steps can also be done at a branch.   

  • Cancel any scheduled or recurring payments
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If you’ve just welcome a new baby into the world, congratulations. Opening a bank account for your child can be a wonderful first gift.

Before you can open your child an account, you’ll need to have a birth certificate or passport for your baby.

As the parent or guardian, you’ll also be listed as a joint holder on the account. This means you’ll need to have proof of your identification and address (a driver’s licence, passport, birth certificate or Medicare Card).

Many banks and credit unions offer baby banks accounts. Usually, you can apply online; otherwise you can head into a local branch or office with your documents.

How do I open a new bank account?

There are a number of ways to open a new bank account – online, over the phone or in the branch. The trick is to decide what type of bank account you want beforehand.

It might sound like a simple enough task, but there are literally hundreds of bank accounts to choose from. And each offer their own banking features and benefits.

A comparison site like RateCity can help you work out what bank account product matches your needs.

Once you’ve made up your mind what you want, it’s advisable to have the following information ready for the application process.

  • A couple of forms of identification (such as driver’s licence, Medicare card, passport)
  • Tax file number
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How do I open a bank account if I'm under 18?

The good news for savvy young folks like you wanting to take charge of your finances is that there are many bank accounts available for under-18s.

For bank accounts that require you to be 18 or older, you’ll have to rope in a parent or guardian to open the account for you.

Otherwise, you can apply by yourself online or at the branch of the bank, credit union or building society that has the account you would like to open. 

If applying online, you might be asked for a form of identification. For under-18s, this could be a Medicare card you’re listed on, your birth certificate and/or your current home address.

In most cases, you can verify your identity online (at the time of applying) or at the branch afterwards.

Do I need to open a business bank account?

Just because you’re in business doesn’t necessarily mean you need a business bank account. You could be a sole trader not registered for GST, and use your personal bank account for business.

If you do want a business account, there are plenty of benefits attached to business transaction and savings accounts, as well as business term deposits.

There are business bank accounts designed for businesses with a high volume of transactions, and those for start-ups with a small amount of trade. You could also include an EFTPOS service with your account.

Some business bank accounts charge for the number of transactions per month, while others offer a pay-as-you-go fee structure, where you only pay fees for transactions you make.

It’s up to you whether your priority is mainly transactions, or earning the maximum amount of interest on your principal. There’s a business banking solution for you if you need one.

Can you deposit money into somebody else's bank account?

One of the easiest banking tasks in the world is depositing money. You can even deposit money into someone else’s bank account if you wish.

The basic information you need to deposit money into a third-party bank account is:

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Including the name of the financial institution isn’t necessary – particularly with online banking – because the BSB will identify this for you.

A handy tip is to record yourself (or add a personal message) in the transaction description or reference. This will show up on the recipients account, letting them know who’s paid them the money.

How can I find bank accounts in my name?

To find ‘live’ bank accounts in your name, you’ll have to ask individual lenders, which involves contacting them one by one and proving your identity each time. To find ‘unclaimed’ bank accounts (those that have been inactive for at least seven years), you can use this website.

How do I open a bank account for a child?

There are few better ways for a child to learn about money management than through savings. And there’s a plethora of bank accounts designed specifically for young people and children.

A bank account for a child can be opened online, over the phone or in a branch in a few easy steps. The minimum age a child can open a bank account for themselves usually ranges between 12 and 14.

If the child is too young to open the account, you can do it for them as their legal parent or guardian. 

To do this, you would need to be over 18, have an Australian residential address and currently reside in Australia (or have proof of residency).

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To get a credit card, you need to show proof of income, which will almost certainly require you to have a bank account.

Can I find my bank account number online?

Yes, you can find your bank account number by logging into your online banking and clicking on the relevant account.

Can I open a bank account in another country?

Despite having a bad rap for facilitating tax evasion, it is possible and legal to open a bank account in another country, also known as an ‘offshore account’.

Some people choose to open a bank account in another country to invest overseas, for higher interest-earning potential or to access foreign banking services.

The process for opening an offshore bank account differs depending on the financial institution and country in which you’re opening the account.

Typically, you will need to provide identification such as a passport, a local bank statement and a signed declaration proving the source of the money being used to open your account. Usually, deposits into offshore accounts can be made by international money transfer.

Do you need a bank account to sell on eBay?

You don’t need a bank account to sell on eBay. But if you don’t have a bank account, you must provide either a credit card or debit card.

How can I deposit cash into my bank account?

The traditional way to deposit cash into your bank account is to go to a branch and give it to a teller. These days, many banks will allow you to make deposits through an ATM as well.