Banking Code of Practice essentials and how it applies to guarantees

The Code of Banking Practice (BCOP) sets standards of good banking practice when dealing with individual or small business customers, including prospective customers, and their guarantors. It also contains specific requirements relating to the provision of banking services. The current version of the BCOP is the 2020 version, which commenced on 1 March 2020. The preceding versions of the BCOP were the 2019 version and the 2013 version. The 2019 BCOP and 2013 BCOP remain relevant, as explained in this guidance note.

This guidance note explains the relevance of the BCOP to legal practitioners, and provides some resources for legal practitioners to use.

This guidance note also explains key provisions of the BCOP that relate guarantees. An example of this is that a subscribing bank’s guarantee must contain a statement that the guarantee complies with the BCOP and a prominent warning containing matters prescribed by the BCOP. This guidance note also highlights some matters that legal practitioners should be aware off when advising subscribing banks and guarantors.

See Banking Code of Practice essentials and how it applies to guarantees.

Practice guidance from selected case law relating to the Banking Code of Practice and guarantees

This guidance note provides practical guidance from selected recent case law regarding the operation of the Banking Code of Practice (BCOP) and its application on guarantees:

• • George 218 Pty Ltd v Bank of Queensland Ltd [2015] WASC 434; BC201511125;
• • Doggett v Commonwealth Bank of Australia [2015] VSCA 351; BC201512471;
• • National Australia Bank Ltd v Rose [2016] VSCA 169; BC201605918; and
• • Commonwealth Bank of Australia v Wood [2016] VSC264; BC201605082.

This guidance note also briefly considers Marsden v DCL Developments Pty Ltd (No. 3). This decision again confirms that the BCOP has contractual effect when incorporated by reference in terms and conditions to the applicable financing documents. See Marsden v DCL Developments Pty Ltd (No. 3) [2016] NSWSC 1795.

See Practice guidance from selected case law relating to the Banking Code of Practice and guarantees .