The Commonwealth Bank has adopted the amendments to the Code of Banking Practice which were published by the Australian Bankers Association on 14 May, 2004. Accordingly, for dealings with the Bank from today, the version of the Code which applies is the Code of Banking Practice 2003 as amended by the amendments of 14 May 2004.
This includes a fine-tuning of some disclosures and practices so they better suit the needs of prospective guarantors and reduce unnecessary time and paperwork. For example, directors of a borrowing company can choose not to receive some information about the financial performance of their company held by the Bank. They can also opt out of having to wait a day after they have received information before they give their guarantees.
ABA members have agreed to the modifications because a significant number of company directors wanting to become guarantors had complained of having been forced to receive information they did not require. Compliance with the original provisions had in some cases caused delays in the settlement of company loan facilities.
The other main modification concerns the disclosure to prospective guarantors of credit limit excesses or account overdrawings by a borrower. Instead of telling guarantors about every excess and overdrawing, a threshold of $100 for excesses and overdrawings has been introduced to ensure that only material excesses and overdrawings are provided to the prospective guarantor.