The Australian Banking Association (ABA) has announced two temporary changes, which will see changes to the Banking Code of Practice allowing more flexibility over customer communication timeless and obligations to lending to small businesses.
Due to the COVID-19 pandemic, these temporary changes had been approved by the Australian Securities and Investments Commission (ASIC):
- In certain circumstances banks may not always be able to meet the timelines for customer communication outlined in some provisions of the Banking Code of Practice; and
- A bank’s obligations when lending to small business customers, to engage in a fair, reasonable and ethical manner, and to exercise the care and skill of a diligent and prudent banker, will be informed by the circumstances and effects of COVID-19 generally.
The ABA said the changes acknowledged that during the pandemic and its aftermath, banks were dealing with high volumes of customers in distressed circumstances.
“Many customer solutions offered as part of the banks’ COVID-19 assistance are tailored, and require banks to ensure the right support to suit customer circumstances,” it said.
The changes would help continue the flow of credit to small and family businesses by recognising the assessment of business loan applications presented unique challenges in this environment.
Under these changes, the obligations remained in place, but non-compliance would not constitute a breach of the code if the banks made a good faith effort to comply.
All other parts of the code continued to apply as usual.