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ASIC approves small business definition changes to Banking Code

Adrian Flores
Adrian Flores
08 January 2021 1 minute readShare

The corporate regulator has given the all clear to changes to the Australian Banking Association’s code of practice that seek to clarify the definition of small business in relation to financial services.

The ABA proposed variations to the code, including amending the code’s definition of ‘banking services’.

The amendment addresses an anomaly in the code’s previous wording that had the unintended result of excluding certain types of small business banking customers who would otherwise meet the Code’s definition of ‘small business’.

In addition, the proposed changes include some minor amendments to the code’s definition of ‘small business’.

The changes to the small business definition were recommended by financial consulting firm Pottinger, who reviewed the definition in September and October 2020.

The review recommended that those changes be made now and that the more comprehensive changes will be considered as part of the code’s triennial review.

Other changes include extending the application of the code’s COVID-19 Special Note allowing for special application of specified code provisions in light of the extraordinary external environment caused by COVID-19 for a further six months until 1 September 2021.

The ABA also proposed changing the code to specify situations in which banks may decline to continue dealing with a representative that a customer in financial difficulty has appointed if the bank reasonably considers that representative is no longer able to act in the customer’s best interests.

Finally, the ABA code changes seek to align the its timeframes for responding to complaints with the updated timeframes in ASIC’s Regulatory Guide 271 Internal dispute resolution due to commence on 5 October 2021.

ASIC began a new framework on 1 January 2021 for approving codes of conduct as part of the Financial Sector Reform (Hayne Royal Commission Response) Bill 2020 which received Royal Assent on 17 December 2020.

The corporate regulator previously approved the code in December 2019, which then commenced on 1 March 2020.

ASIC approves small business definition changes to Banking Code
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Adrian Flores
Adrian Flores

Adrian Flores is the deputy editor of MyBusiness. Before that, he was the deputy editor for SMSF Adviser as well as features editor for ifa (Independent Financial Adviser), InvestorDaily, Risk Adviser, Fintech Business and Adviser Innovation.

You can email Adrian at [email protected].

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