Around 10,000 more small businesses will enjoy protections under the Banking Code of Practice, after Australia’s corporate regulator greenlit amendments to the sector’s lending rulebook.
The Australian Securities and Investments Commission (ASIC) on Thursday approved a raft of changes to the Code, a rulebook set by the Australian Banking Association (ABA) outlining the standards banks must follow when dealing with individual and small business customers.
The Code, last updated in 2019, defines small business customers as entities with less than $10 million in annual turnover, fewer than 100 full-time equivalent employees, and aggregate borrowings below $3 million.
The amended Code will lift the aggregate borrowing threshold will lift to $5 million.
As a result, thousands more small businesses will access special protections when dealing with the banks.
These protections include:
Those updates will come into effect on February 28, 2025.
The planned reforms come after an ABA review and a lengthy period of consultation undertaken by ASIC.
In a statement, ASIC chair Joe Longo said the reforms will be positive for borrowers, and are not the final step to ensure fair play among the banks.
‘The Code and reports like these are a call for banks to continuously look at how they should be putting the customer front and centre,” Longo said.
“ASIC expects the ABA to continue working with its members to consider opportunities to improve consumer outcomes through data insights, including the identification of consumers experiencing vulnerability and customers identifying as First Nations consumers.
“We look forward to following the implementation of the Code and seeing its subscribers hold themselves to high standards of implementation and compliance.”
In a statement, ABA CEO Anna Bligh said the updates will result in a Code “with teeth”.
“This strikes the right balance between creating new protections and simplifying the Code to ensure it is easier to understand and apply – not only for bank staff, but for customers and their representatives too,” she said.
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Senior Business Journalist
Focused on the small business sector, David’s work covers the political, regulatory, and economic issues facing Australian entrepreneurs. Prior to joining SmartCompany, he was a reporter for Business Insider Australia. You can follow him on LinkedIn.
