Australian Banking Association chief executive Anna Bligh's call for mutual banks, credit unions and building societies to adopt the ABA's new banking code of practice has been labelled "gratuitous" by an industry body which says a better code of practice is already in place to protect consumers.
The Consumer Owned Banking Association said the consumers that the ABA wants to bring into the fold with its new code are already protected strongly under COBA's code of practice.
"This call by the ABA is somewhat gratuitous given that the COBCOP was always scheduled for review early next year, before the new ABA code commences. We will take the new ABA code into account in that review," COBA chief executive Michael Lawrence said.
On Friday, the ABA called for credit unions, building societies and mutual banks banks that are not ABA members to adopt the code alongside its members in July, next year. The goal is to bring customers the same lending standard, regardless of who they chose to borrow from, the association said.
Lawrence said several provisions in the COBA code are stronger than the current ABA code. COBA said this includes default fees, protection for guarantors, reverse mortgage protections, clearer language around responsible lending, more sympathetic language around customers facing financial difficulties and compliance with the DHS code of operation.
"It is ironic that the major banks are lecturing credit unions and building societies about consumer protections," he said.
"While we welcome constructive engagement with our listed bank peers, customer owned banking institutions object to any suggestion that their record of putting customers first is somehow inferior to the track record of the major banks."
"We are profit-making but not profit-maximising. We are not trying to squeeze our customers to please shareholders. We are not perfect but we are not conflicted about who we are working for."