Australia’s shareholder banks have been slapped down after calling on customer-owned banks to adopt their new code of ethics.
The Australian Banking Association (ABA) said the entire lending industry should adopt its Banking Code of Practice, which ABA members are required to observe.
The ABA said that credit unions and building societies – which aren’t part of the ABA – should also be bound by the code, so “there are no gaps in protections for customers”.
ABA chief executive Anna Bligh said shareholder banks have lifted the standard in banking with their new code.
“Member banks are proud of this new standard set in banking, approved by the regulator ASIC and to be fully implemented by July 1, 2019,” she said.
“Other lenders are offering similar products, however the standards are not the same, which creates both confusion for customers and a loophole in protections.”
However, the Customer Owned Banking Association (COBA), which represents member-owned banks, said its existing code of ethics was stronger than the ABA’s new code.
The Customer Owned Banking Code of Practice includes “clearer, modern language around responsible lending” and “more sympathetic language for customers experiencing financial difficulties”, among other differences.
COBA chief executive Michael Lawrence said it was ironic that shareholder banks were lecturing credit unions and building societies about consumer protection.
“While we welcome constructive engagement with our listed bank peers, customer-owned banking institutions object to any suggestion that their record of putting customers first is somehow inferior to the track record of the major banks,” he said.
“We are profit-making, but not profit-maximising. We are not trying to squeeze our customers to please shareholders. We are not perfect, but we are not conflicted about who we are working for.”