Under the two changes made by the Australian Banking Association (ABA), they acknowledge that:
- 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.
- 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 acknowledge that during the pandemic and its aftermath, banks are dealing with very high volumes of customers in distressed circumstances and operating in very uncertain economic conditions.
“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,” the industry body said.
Further, the ABA said the temporary changes will help continue the flow of credit to small and family businesses during current economic challenges, by recognising that the assessment of business loan applications presents unique challenges in this environment, including the difficulties in making predictions for matters such as the pace of economic recovery and in assessing businesses’ ability to service loans.
It also said the temporary changes also reflect that, in some limited circumstances, banks may not be able to comply with usual timing requirements specified in the code.
The changes will only apply to paragraphs 101(b) and (c), 102, 148, 164, 205 and 206 of the code.
“Under the temporary changes, the substantive obligations of these paragraphs remain in place, but non-compliance with the specified times will not constitute a breach of the code, if banks are making good-faith efforts to comply,” the ABA said.
“To ensure that customers remain fully informed of their rights to go to AFCA, the Special Note commits banks to informing customers of this within the usual time frames.
“All other parts of the code, including time limits specified in paragraphs other than those listed above, continue to apply as usual.”