The Australian Banking Association is to be commended on the excellent job it has done spruiking the new code of conduct for its members over the last 48 hours.
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Anna Bligh, the former Queensland premier who is now the ABA's CEO, has been leading the charge.
![The ABA's Anna Bligh. Picture: Mick Tsikas, AAP The ABA's Anna Bligh. Picture: Mick Tsikas, AAP](/images/transform/v1/crop/frm/fdcx/doc73xif298hyt1chsdxlck.jpg/r0_126_4372_2584_w1200_h678_fmax.jpg)
Her hard sell has come close to, but didn't quite, convince most of her auditors the big four had came up with these reforms by themselves for the benefit of their customers.
The reality is, of course, very different. The new code of conduct was signed off on by the Australian Securities and Investments Commission last July.
This was at the height of the Royal Commission into banking which had revealed widespread abuses and morally questionable practices right across the financial sector.
It replaces an earlier code, first created in the early 1990s, that had been repeatedly criticised by a number of bodies, including ASIC and the Banking Code Compliance Committee.
"Five banks reported zero breaches of the (old) code's provision of credit and dispute resolution obligations, while six banks reported no breaches of their debt collection obligations," the BCCC said in a statement in 2017.
"This is unlikely to accurately reflect the true situation on the ground".
That turned out to be the understatement of the decade with the Hayne Royal Commission revealing a quagmire of dubious practices, including arbitrary foreclosure decisions that had cost families their homes and livelihoods, fees for no service, unscrupulous and high pressure sales tactics and an apparent indifference to what was best for customers.
The new code was being criticised as unfit for purpose within days of its announcement last year by the Australian Small Business and Family Enterprise Ombudsman and former ACT chief minister, Kate Carnell.
"[The revised code] falls short of addressing the imbalance of power held by the banks," Ms Carnell said in a submission on the Hayne royal commission's interim report.
"This will allow the continuation of the aggressive bank tactics revealed by the commission."
Ms Carnell, and other critics, have highlighted the fact that while the new code had been subject to approval by the ASIC, the corporate regulator does not have the power to administer or enforce it.
This casts into doubt Ms Bligh's oft repeated claims the new code of conduct "has real teeth".
Her claim increased scrutiny of the finance industry, and new powers that allow the BCCC to mandate additional staff training and require serious breaches to be rectified, would be sufficient to change behaviour is highly debatable.
Hayne's interim recommendation the code be written into law and be subject to ASIC enforcement went much further than this.
The big banks, who are spinning the code as something punters should be grateful to them for, got off lightly
The big banks, who seem to have made a virtue of necessity by spinning the new code as their own initiative and something the punters should be grateful to them for, have actually got off very lightly.
They have been allowed to rewrite their own rule book in order to eliminate obvious injustices by allowing customers to close credit card accounts on line and providing low or no fee bank accounts while preserving the existing power imbalance between their customers and themselves.
Nobody should be fooled by the new code that came into effect on Monday.
The big banks have done the very least they could get away with.