What is an Australian financial institution?

What is an Australian financial institution?

ASIC regulates banks and financial service providers, sets and enforces banking standards and investigates and acts against misconduct in the banking sector. Find out how ASIC regulates financial services and what you can do to resolve any problems with your bank or bank account.

How ASIC regulates financial services

ASIC requires all financial services providers, including banks, to be licensed and meet their licence conditions.

We work to ensure that financial services providers:

  • act professionally, treat you fairly and prioritise your best interests
  • provide you with financial products that meet your needs
  • meet their responsible lending obligations
  • provide proper disclosure (information about products and services and any associated costs and conditions).

Note: On 25 September 2020, the Government announced proposed reforms to the responsible lending obligations contained in Chapter 3 of the National Consumer Credit Protection Act 2009. The proposed reforms will amend the obligations that apply before entry into a credit product or the provision of credit assistance. ASIC’s guidance relating to the current responsible lending obligations will be reviewed and updated when the proposed reforms are finalised.

ASIC’s role is also to:

Find out how ASIC regulates lenders and credit card providers.

How the ePayments Code protects you

Users of electronic payment facilities in Australia are protected by the ePayments Code. ASIC is responsible for monitoring compliance with the Code. The Code regulates consumer electronic payments, including ATM, EFTPOS and credit card transactions, online payments, internet and mobile banking, and BPAY.

Almost all banks, credit unions and building societies in Australia – as well as consumer electronic payment facilities, such as PayPal – subscribe to the ePayments Code.

The Code:

  • requires subscribers to give people clear terms and conditions
  • outlines how changes to terms and conditions (such as fee increases) need to be made, and how receipts and statements need to be given, and
  • sets the rules on who pays for unauthorised transactions and how mistaken internet payments are recovered.

Find out more about the ePayments Code.

Errors on your account and mistaken payments

If you notice errors on your credit card or bank account statement that look like transactions you did not make, or if you have mistakenly transferred money to the wrong person, the ePayments Code sets out whether you are entitled to a refund.

Find out when you can get your money back using the ePayments Code.

Switching bank accounts

The ePayments Code also places obligations on its subscribers to help existing and new customers when they switch their accounts between financial institutions.

Your current bank can help you by providing you with a list of your direct debits, credit arrangements and periodical payments for the past 13 months. Your new financial institution can help you to notify organisations with which you have arrangements for direct debits, credit and periodical payments to assist your move.

Find out more about bank accounts.

Problems with your bank or bank accounts

There are three steps to take to resolve issues with your bank or financial institution:

  1. Contact the bank - Explain the issue to them by phone, in person, or in writing.
  2. Make a formal complaint - If you are not happy with their response or if the problem can't be resolved, ask the bank for their complaints handling procedure or find it on their website. Put your complaint in writing using Moneysmart’s tips on what to include in your letter.
  3. Complain to AFCA - If you don't receive a response in a reasonable time or you're unhappy with the response, you can make a complaint to the Australian Financial Complaints Authority.

Help for Indigenous consumers

For help with making your complaint, you can contact ASIC's Indigenous Help Line on 1300 365 957.

Banking codes of conduct

To progress your complaint, you could refer to the banking codes of conduct that have been developed by industry. A code of conduct (or code of practice) is a set of enforceable rules setting out an industry’s commitments to deliver a certain standard of practice.

Codes of conduct are intended to raise industry standards, complement legislative requirements (and in some cases go beyond the legislative requirements) and encourage consumer confidence.

Find more details on the banking codes of conduct:

If you believe that a bank has breached one of these codes, you can report your concerns to the Australian Financial Complaints Authority.

  • Managing debt 
  • Find a financial counsellor 
  • Banking and credit scams

The Financial Claims Scheme (FCS) covers those banking institutions incorporated in Australia and authorised by APRA that are:

  • Australian banks
  • foreign subsidiary banks
  • building societies
  • credit unions
  • certain other authorised deposit-taking institutions.

See the full list of banks, building societies and credit unions on this website that are covered under the FCS.

The FCS does not apply to the following institutions:

  • branches of foreign banks in Australia
  • foreign branches of Australian banks (located overseas)
  • finance companies and other financial institutions that are not licenced (authorised) by APRA.

Different banking businesses under a banking licence

Some banks, building societies or credit unions may operate multiple banking businesses with different trading names under the same banking license. However, under the FCS the deposit protection of $250,000 applies per account holder to deposits under each banking license, which includes deposits with any other banking businesses with different trading names that operate under a banking license. Therefore, if you have deposit accounts with a bank, building society or credit union and with any other banking businesses they operate with different trading names, you'll need to add all these deposits together to calculate the amount that is covered under the FCS for that particular institution (or banking license). 

Bank A is licenced by APRA under the name 'Bank A'. Bank A also operates a banking business trading under the name 'Bank B' under its banking license. John has two savings accounts of $200,000, one with Bank A and another account with Bank B. If Bank A failed and the Australian Government activated the Financial Claims Scheme, John's total amount of $400,000 would only be partly covered (up to the $250,000 FCS limit). This is because the FCS applies to each banking license, which in this case covers both Bank A and Bank B under the same license. Therefore, John will have a maximum of $250,000 protected under the FCS. However, John may be able to recover his remaining $150,000, or part of it, in the liquidation of Bank A, depending on what assets are available.

For further information, including more on the liquidation process, go to the Banking FAQs.

In order to continue enjoying our site, we ask that you confirm your identity as a human. Thank you very much for your cooperation.