Credit unions and building societies commit to fair, responsible lending practices
27 May 2009
Credit unions and mutual building societies have launched Australia’s first code of practice to commit to fair, responsible and ethical lending practices.
With 587,000 Australian families currently experiencing financial distress, the new Mutual Banking Code of Practice has been developed by industry body Abacus – Australian Mutuals. Under the new Code, credit unions and mutual building societies make a clear commitment to responsible lending - well ahead of the proposed federal credit legislation and well ahead of any commitments being considered by other lenders.
“Australian credit unions and mutual building societies consistently beat the banks when it comes to customer satisfaction because we put our members first. The new Mutual Banking Code of Practice sets out in clear language the rights of members and the responsibilities of their lenders,” says Abacus CEO Louise Petschler.
As part of the Code, credit unions and building societies make practical promises to their members. Examples of these promises include:
- Making sure members only borrow what they can afford to pay back and giving help to those members who get into financial difficulties;
- Ensuring exception fees are reasonable compared to actual costs;
- Implementing fair terms and conditions for our products and making sure that members are fully informed of any fees and charges applicable to products and services;
- Providing members with access to advice and dispute resolution services should they have a concern.
According to Ms Petschler, confidence in credit unions and mutual building societies has remained high throughout the recent financial turbulence with credit unions and building society customers consistently rated as the “most satisfied” by Roy Morgan’s Consumer Banking Customer Satisfaction Reports – well ahead of bank customers.
“We want to reinforce and articulate the responsible and sound lending principles already practised by credit unions and mutual building societies well into the future, and the new Mutual Banking Code of Practice will help us do this.”
“It’s good for the members of credit unions and building societies to have a plain English document that is clear and transparent about their rights, and their lender’s obligations. The Code reflects how, for credit unions and building societies, their members always come first,” says Ms Petschler.
Jan Edwards, CEO of Berrima District Credit Union, who has signed the new Mutual Banking Code of Practice, agrees.
“The new Mutual Banking Code of Practice will clarify in simple terms why people should do business with us. And in a climate where banks have been brought to task over toxic lending practices, reinforcing the responsible and excellent lending practices of credit unions and mutual building societies is helpful for consumers wanting a better banking solution.”
According to Ms Edwards, the new Mutual Banking Code of Practice has been written in plain English and focuses on ensuring that members are dealt with in a fair and ethical manner.
“Credit unions and mutual building societies in Australia offer a genuine alternative to the banks. The new Mutual Banking Code of Practice will ensure that Australian borrowers will be protected through the good times and bad,” she concludes.
All credit unions and building societies (and banks) are Authorised Deposit-taking Institutions (ADIs), regulated under the Banking Act 1959. Australian credit unions and mutual building societies meet the same high standards of prudential regulation as banks through full regulatory oversight by APRA, the prudential regulator.
For all media enquiries including: interview opportunities with Abacus CEO Louise Petschler, photos, or credit union and mutual building society members who have signed the Code, please contact:
Pamela Eldridge
Media Adviser, Abacus – Australian Mutuals
02 8299 9024, 0423 843 790
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Is your lender playing fair?
Abacus encourages borrowers to think about their current lender and the service they are receiving by asking:
- Is your lender fair and ethical when dealing with you?
- Are you viewed as a valued customer?
- Does your lender give you clear and easy to understand information about their fees, products and services?
- Are they responsible lenders?
- Do they deliver high customer service and standards?
- Do they deal fairly with any complaints?
- Do they recognise your rights as a borrower?
- Do they comply with legal and industry obligations?
- Do they recognise the impact they have on the wider community?
- Have they reviewed their Code of Practice to reflect the current economic environment?
For further information about the new Mutual Banking Code of Practice visit: this link
