ASIC Corporations (Approval of Banking Code of Practice) Instrument 2019/663

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Legislation au F2019L00878 Not in force Legislative Instrument

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EXPLANATORY STATEMENT for
ASIC Corporations (Banking Code of Practice – Revocation of 2018 Approval) Instrument 2019/662 and ASIC Corporations (Approval of Banking Code of Practice) Instrument 2019/663

Prepared by the Australian Securities and Investments Commission

 

Corporations Act 2001

The Australian Securities and Investments Commission (ASIC) makes ASIC Corporations (Banking Code of Practice – Revocation of 2018 Approval) Instrument 2019/662 (the Revocation Instrument) and ASIC Corporations (Approval of Banking Code of Practice) Instrument 2019/663 (the 2019 Approval Instrument) under paragraph 1101A(4)(a) and subsection 1101A(1) of the Corporations Act 2001 (the Corporations Act) respectively.

Subsection 1101A(1) of the Corporations Act provides that ASIC may, on application, approve codes of conduct that relate to any aspect of the activities of financial services licensees, authorised representatives of financial services licensees, or issuers of financial products, being activities in relation to which ASIC has a regulatory responsibility. The approval must be in writing.

Paragraph 1101A(4)(a) of the Corporations Act provides that ASIC may, on application by the person who applied for the approval, revoke an approval of a code of conduct.

 

  1.                                             Background

ASIC’s code approval power

ASIC must not approve a code of conduct under section 1101A unless it is satisfied that:

(a)  the code is not inconsistent with the Corporations Act or any other law of the Commonwealth under which ASIC has regulatory responsibilities; and

(b) it is appropriate to approve the code, having regard to the following matters, and to any other matters that ASIC considers are relevant:

(i)                 the ability of the applicant to ensure that persons who hold out that they comply with the code will comply with the code as in force from time to time; and

(ii)               the desirability of codes of conduct being harmonised to the greatest extent possible.

 

The Australian Banking Association’s Banking Code of Practice

On 19 December 2017, the Australian Banking Association (ABA) applied to ASIC for approval of its Banking Code of Practice (2018 Banking Code) under section 1101A of the Corporations Act. ASIC approved the ABA’s 2018 Banking Code by issuing ASIC Corporations (Banking Code of Practice) Instrument 2018/700 (the 2018 Approval Instrument). The 2018 Banking Code was due to commence operation on 1 July 2019.

Following ASIC’s issue of the 2018 Approval Instrument, the ABA proposed a number of changes to the 2018 Banking Code. On 14 December 2018 and 14 May 2019, the ABA applied to ASIC for approval of variations to the 2018 Banking Code. The variations are designed to:

(a)   clarify that a bank will not charge fees for services to deceased customers, where services are no longer being provided to that customer’s estate;

(b)  modify banks’ commitment to provide a copy of a valuation to a small business borrower to allow banks to place reasonable limitations on the use to which the borrower (or any third parties) can put that valuation;

(c)   clarify the original intention and the position in the ABA’s Industry Guideline: Appointing property valuers when lending to small businesses and primary producers that a copy of the valuation be provided to a small business borrower only where the loan is secured against commercial or agricultural property;

(d)  reflect ASIC’s implementation of law reforms to credit card responsible lending in ASIC Credit (Unsuitability – Credit Cards) Instrument 2018/753; and

(e)   make minor and technical corrections throughout the 2018 Banking Code.

The ABA had initially applied under subsection 1101A(2) of the Corporations Act for ASIC’s approval of the above variations to the 2018 Code. However, the extent of the textual changes is such that the ABA has since requested that ASIC instead revoke the 2018 Approval Instrument and approve a new 2019 Banking Code (reflecting the above variations) (the 2019 Banking Code) rather than approve a variation (which would need to enumerate all variations).

 

2.                                                Purpose of the instruments

 

The purpose of the Revocation Instrument is to revoke the 2018 Approval Instrument, such that the 2018 Banking Code is no longer approved by ASIC.

 

The purpose of the 2019 Approval Instrument is to provide ASIC’s approval of the ABA’s 2019 Banking Code, as published on 24 June 2019.

 

ASIC has assessed the 2019 Banking Code and is satisfied that it meets the requirements of subsection 1101A(3) of the Corporations Act.

 

 

3.                                                Operation of the instrument

Section 2 of the Revocation Instrument provides that the Revocation Instrument commences on the day after it is registered on the Federal Register of Legislation. Section 5 provides that approval of the 2018 Banking Code is revoked.

Section 2 of the 2019 Approval Instrument provides that the 2019 Approval Instrument commences on the same day as the Revocation Instrument. Section 5 provides that the 2019 Banking Code is approved.

4.                                                Documents incorporated by reference

 

The Revocation Instrument incorporates by reference the 2018 Banking Code.

The 2019 Approval Instrument incorporates by reference the 2019 Banking Code.

Both documents are available at http://www.ausbanking.org.au.

The Banking Code of Practice (the Code) is a self-regulatory document created by the banking industry, as represented by the ABA, and is administered by an independent Code monitoring body. The Code sets out standards of practice and service in the Australian banking industry for individual and small business customers, and their guarantors. ASIC does not administer the Code.

 

5.                                                Consultation

 

ASIC engaged with a targeted range of stakeholders to invite their feedback on the content of the draft 2019 Banking Code. Consultation on the 2018 Banking Code (which was approved by the 2018 Approval Instrument) contributed to ASIC’s assessment of the 2019 Banking Code, as the 2019 Banking Code is simply the 2018 Banking Code with updates as described above.

Stakeholders with whom ASIC engaged in relation to the 2018 Banking Code and the 2019 Banking Code included consumer and small business representatives, various industry peak bodies, ombudsmen and the Code monitoring body.

The ABA undertook a substantial stakeholder consultation process as part of the development of the Code.

 

Overview

The ASIC Corporations (Banking Code of Practice – Revocation of 2018 Approval) Instrument 2019/662 and the ASIC Corporations (Approval of Banking Code of Practice) Instrument 2019/663 were enacted in 2019 by the Australian Securities and Investments Commission (ASIC) under the Corporations Act 2001. These instruments were introduced to address the need to revoke the 2018 approval of the Banking Code of Practice and to approve a revised version of the Code to reflect changes proposed by the Australian Banking Association (ABA). The 2019 Banking Code incorporates clarifications and modifications to the 2018 Code, including changes related to fees for deceased customers, the provision of valuations to small business borrowers, and technical corrections. The primary objective of these instruments is to ensure the updated Code aligns with regulatory standards and industry practices, maintaining consumer protection and service standards within the Australian banking sector.

Scope and Application

The ASIC Corporations (Banking Code of Practice – Revocation of 2018 Approval) Instrument 2019/662 and ASIC Corporations (Approval of Banking Code of Practice) Instrument 2019/663 are made under the Corporations Act 2001. The Revocation Instrument revokes the previous approval of the Banking Code of Practice by the Australian Banking Association (ABA), while the 2019 Approval Instrument approves a revised version of the Banking Code of Practice. These instruments apply to financial services licensees, authorised representatives of financial services licensees, and issuers of financial products that fall within ASIC's regulatory purview. The instruments have a national reach as they apply across Australia, given ASIC's role as the national regulator under the Corporations Act. There are no specific exclusions or thresholds outlined in these instruments, but they do note that the Banking Code of Practice is a self-regulatory document, not administered by ASIC but by an independent Code monitoring body. The scope of application may be extended or restricted through subordinate instruments, as permitted by the Corporations Act.

Key Provisions

The main operative sections of the Revocation Instrument (ASIC Corporations (Banking Code of Practice – Revocation of 2018 Approval) Instrument 2019/662) and the 2019 Approval Instrument (ASIC Corporations (Approval of Banking Code of Practice) Instrument 2019/663) concern the revocation of the 2018 Banking Code approval and the approval of the 2019 Banking Code. Specifically, Section 5 of the Revocation Instrument revokes the approval of the 2018 Banking Code (section 1101A(4)(a) of the Corporations Act 2001), and Section 5 of the 2019 Approval Instrument grants approval to the 2019 Banking Code (subsection 1101A(1) of the Corporations Act). These instruments aim to ensure that the Banking Code of Practice reflects updated standards and practices within the banking industry. The obligations and requirements imposed by these instruments primarily focus on the Australian Securities and Investments Commission (ASIC). Under the Corporations Act 2001, ASIC must ensure that any approved code of conduct is consistent with the Act and other relevant laws, and that it is appropriate to approve the code based on factors such as the applicant's ability to enforce compliance and the desirability of harmonising codes of conduct. ASIC must also ensure that the Banking Code of Practice adheres to these standards and does not conflict with any legislative requirements. For breaches of the requirements outlined in the Corporations Act 2001, various civil and criminal penalties may apply. Civil penalties can include substantial fines and, in some cases, imprisonment. For example, under section 1300 of the Corporations Act, an individual or entity can be fined up to $210,000 for breaches relating to misleading or deceptive conduct. Additionally, under section 1301, an individual can be subject to imprisonment for up to five years for engaging in such conduct. The maximum penalties are determined by the severity of the breach and are subject to the discretion of the courts. It is important for entities governed by these instruments to adhere strictly to the approved codes and standards to avoid such consequences.

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Sourced from the Federal Register of Legislation at 26 August 2026. For the latest information on Australian Government law please go to https://www.legislation.gov.au.