The Australian Banking Association (ABA) believes the new Banking Code of Practice standards should be adopted across the entire industry, including banks that are not ABA members.
According to the association, the standards between credit unions, buildings societies and others should not differ from banks, who will adopt the code in July next year.
ABA chief executive Anna Bligh said it was important that customers were protected regardless of who they choose to bank with, despite the new Code having been tailored specifically to the types of banks within its membership.
"Other lenders are offering similar products however the standards are not the same, which creates both confusion for customers and a loophole in protections," Bligh said.
"Particularly for small business, every lender, including building societies, credit unions and others, should give sufficient notice when loan conditions might change to help with future planning."
"These common standards for customers could be achieved by making membership of an ASIC approved code, such as the ABA code, a requirement of a licence."
Noting the association expected further changes to be made to banking following the final report of the Royal Commission, Bligh said all lenders should have to adopt the same standards to ensure industry consistency.
The Customer Owned Banking Association (COBA) fired back, saying consumers already had strong protection under the Customer Owned Banking Code of Practice (COBCOP).
"We are really pleased that the ABA's new Code has stepped up to keep pace with the standards customers of credit unions, building societies and mutual banks have enjoyed for years," COBA chief executive Michael Lawrence said.