Banking Code changes to assist low income customers and farmers in drought

21 November 2019

The ACCC has authorised changes to the Australian Banking Association’s (ABA) Banking Code of Practice, after imposing several conditions aimed at improving the code’s benefits to low-income customers. 

The ABA, on behalf of its 23 members, sought ACCC authorisation for changes to update its Banking Code in response to recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Hayne Royal Commission).

“The new Banking Code, with the ACCC’s conditions, will help ensure that the harms to low income consumers so vividly identified by the Hayne Royal Commission are addressed,” ACCC Deputy Chair Delia Rickard said.

As authorised by the ACCC, the updated Banking Code now prohibits informal overdrafts on low or no fee basic accounts held by eligible customers, unless agreed to by the customer, and it prohibits overdrawn fees and dishonour fees.

It also sets out the features of a basic bank account product, including that it will have no minimum deposits; and will provide free direct debit facilities, access to a debit card at no extra cost and free unlimited domestic transactions for eligible customers.

In addition, the updated Banking Code will prevent default interest and fees being charged on agricultural loans in areas affected by drought and other natural disasters.

“The new Banking Code will address a significant source of harm to farmers experiencing drought,” Ms Rickard said.

The ACCC foreshadowed in September it would seek to impose conditions to the proposed Banking Code and sought further feedback.

“Our new conditions aim to address concerns that the ABA’s original proposed Banking Code needed to be stronger,” Ms Rickard said.

“We had concerns that the original proposed code did not fully reflect the spirit of the Hayne Royal Commission’s recommendations about basic accounts. For example, low income customers could have been charged interest rates of up to 20 per cent on overdrawn amounts despite not having agreed to take on an overdraft facility.”

Under the conditions, ABA member banks must either not charge interest, or refund any interest charged, on informal overdrafts on basic accounts held by eligible low income customers if the customer has not agreed to an overdraft facility. Banks must also proactively identify customers who may be eligible for basic accounts.  

The ABA must report to the ACCC on several matters; including any changes to the number of banks offering basic bank accounts, how often informal overdrafts are occurring without the customer’s agreement, and the steps that banks have taken to contact existing customers who might be eligible for a basic account. These reports will be made publicly available.

“The ACCC wants to see improved outcomes for low-income customers and farmers, and we also want the new Banking Code to deliver public benefits and address the Hayne Royal Commission’s recommendations,” Ms Rickard said.

The final determination and more information about the application for authorisation is available at The Australian Banking Association


The ABA sought ACCC authorisation to revise its Banking Code of Practice in response to the Hayne Royal Commission on 22 May 2019.

ACCC authorisation is needed because the changes to the Banking Code require competing banks to reach an agreement through the ABA, actions that would otherwise be in breach of competition laws.

The proposed changes will come into force on 1 March 2020, pending Australian Securities and Investments Commission approval of a second round of changes to the Banking Code separate to this review process.

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