Small business consumers

If you run a small business, the Customer Owned Banking Code of Practice offers you unique consumer protection.

This protection extends to small business loans offered by credit unions, mutual banks and mutual building societies that subscribe to the Code. (Not sure if your customer owned bank subscribes? Check our Code Subscriber register.)

Definition of a small business

To be covered by the Code, your business must meet its definition of a small business, which is:

  • a business having fewer than 100 full time (or equivalent) staff if it involves the manufacture of goods, or
  • in any other case, 20 full time (or equivalent) staff.

Individual customers of Code Subscribers are also covered.

Your rights under the Code

Responsible lending practices

The Code’s responsible lending requirements set out lending obligations to small business customers or loans not regulated by the National Consumer Credit Protection Act 2009.

For all lending, the customer owned bank is required to be a “prudent and responsible lender” under the Australian Prudential Regulation Authority’s prudential standards and regulations.

Under the Code, customer owned banks commit to only lend amounts that they believe – on the information available – the customer can reasonably afford to repay. (Different criteria apply in the case of some products, such as bridging finance and reverse mortgage loans.)

Credit limit increase offers

The Code’s obligations regarding credit limit increase offers are consistent with obligations under the National Consumer Credit Protection Act 2009. They go further though, and extend these obligations to credit limit increase offers made to small business customers and to individuals where the credit product is not regulated by this Act.

Safeguards for loan guarantors

The Code’s safeguards for loan guarantors apply to guarantees given by an individual or small business that secures a loan or other credit facility provided by the customer owned bank to a customer. The requirements apply regardless of whether the loan guarantor is also a customer of the customer owned bank.

Where a customer owned bank requires a director of a small business to give a personal guarantee for a loan, only certain requirements of this section of the Code must be met.

Defend your rights

If you believe your customer owned bank has breached these Code obligations, you can report a concern to us and help to raise industry service standards.

Find out more

Download the Customer Owned Banking Code of Practice (PDF, 689 KB, 32 pages)

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