The Australian Competition and Consumer Commission has authorised the Customer Owned Banking Association to include certain provisions in its new Code of Practice, clearing the way for the new code to go live in October.

COBA needed authorisation to give its members legal protection from competition laws in relation to a several code provisions, including commitments to:

not charge or only charge at cost for relevant products or services; dishonour credit card transactions that would result in a customer exceeding their credit limit by more than 10 per cent; not require customers experiencing financial difficulty to access their superannuation to meet their loan obligations; and restrict the circumstances under which the customer’s debt will be sold, particularly when the customer is experiencing financial difficulty.

The new Customer Owned Banking Code of Practice, which replaces the 2018 version, includes significant changes to obligations covering vulnerability and inclusion.

In June, the Customer Owned Banking Code Compliance Committee issued a report saying most of the 57 code subscribers have work to do to ensure they comply with the new code.

“Fewer than half of all subscribers confirmed that they have vulnerability policies or processes relating to mental health, physical disability, serious illness, First Nations peoples or customers who are unfamiliar with banking products,” it said.

“These vulnerability examples are specifically referenced in the 2022 code and subscribers need to be able to demonstrate they can identify and respond to customers experiencing these types of vulnerabilities.”

The new code has an expanded section on loan guarantees, with a lengthy section on safeguards for guarantors. Last year, the Banking Code Compliance Committee reported that there were widespread problems with compliance in this area.

A new section deals with selling debt. It says COBA members will only sell debts to businesses that comply with the Debt Collection Guidelines and the Code of Operation: Recovery of Debts from Department of Human Services Income Support Payments and Veterans’ Affairs Payments. Debt buyers must also be members of the Australian Financial Complaints Authority.

Members will not sell debt if they are aware that the debt arose from domestic violence or elder abuse.