Banks try to put the bad old days be­hind them

Code of con­duct is wel­come but more re­forms are needed

Money Magazine Australia - - THIS MONTH -

Last year was one the banks prob­a­bly would pre­fer to for­get. A re­lent­less se­ries of scan­dals and fines kept them on front pages and at the fore­front of the po­lit­i­cal agenda.

But the banks are ap­proach­ing 2018 as a fresh start, us­ing the up­com­ing royal com­mis­sion as a way to clear the air. In a bid to get in ahead of the game, they have re­leased a new vol­un­tary code of con­duct to try to win back con­sumer con­fi­dence.

The Aus­tralian Bankers’ As­so­ci­a­tion’s new in­dus­try code aims to make prod­ucts fairer for con­sumers and has made a com­mit­ment to more eth­i­cal be­hav­iour.

Key changes in­clude:

Telling cus­tomers be­fore they are about to be charged a fee, giv­ing them time to pay off their credit card or top up their ac­count.

No­ti­fy­ing cus­tomers be­fore the in­ter­est-free pe­riod on their card ends.

Giv­ing cus­tomers the abil­ity to can­cel their credit cards on­line, rather than be­ing forced to do so over the phone or in per­son at a branch.

Pro­vid­ing cus­tomers with a list of direct deb­its and re­cur­ring re­pay­ments, mak­ing it eas­ier for them to switch.

Pro­vid­ing more safe­guards to guar­an­tors who help fam­ily mem­bers with their home loans.

The banks are mak­ing a con­certed ef­fort to make their prod­ucts fairer. The re­vised code is a le­git­i­mate step in the right di­rec­tion but it’s by no means pens down just yet for our banks.

When it comes to credit cards, more re­form is still needed in re­la­tion to in­ter­est rates. RateCity data shows that just 4% of cards of­fer a rate un­der 10%. Our banks can do bet­ter than this.

We would also like to see the credit card com­pa­nies in­crease the min­i­mum re­pay­ments peo­ple are forced to make each month. Cur­rently most cards re­quire cus­tomers to only pay be­tween 2% and 3% of their bill – which is a pit­tance.

By in­creas­ing the min­i­mum re­pay­ments to 10%, cus­tomers would be forced to pay back a rea­son­able amount of debt and avoid pay­ing some un­nec­es­sary in­ter­est.

Sally Tin­dall, money edi­tor, RateCity

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