Australia's mutual banks and credit unions are getting a firmer rulebook on how they treat customers in trouble. As Australian Broker reported, independent reviewer Eva Scheerlinck delivered the final report of the Customer Owned Banking Code of Practice review to COBA on 31 July 2026, with the outcome announced 6 August in Sydney.
The Code covers 46 of 48 customer-owned banks and more than 5.4 million Australians. These lenders have more than tripled their mortgage book since 2019, reaching $150.9 billion in residential lending. So this is not a fringe segment.
What changes for a borrower in difficulty
The sharpest changes sit in financial hardship. A substantive response to a hardship request must now follow within 21 business days, aligning the mutuals with the National Credit Code and the Banking Code that applies to investor-owned banks. For a business owner who has flagged trouble and heard nothing, that puts a clock on the silence.
Disaster hardship becomes its own category, with adverse credit reporting suppressed for affected customers. The debt waiver provision is strengthened: where a customer faces severe, ongoing hardship with no reasonable prospect of repayment, subscribers must genuinely consider a waiver, and any decision, including a refusal, must be given in writing.
Automated decisions get a human backstop
Where an automated process materially informs a decision affecting a customer, the lender must disclose it and provide a guaranteed pathway to human review on request. Routine fraud screening that doesn't determine an outcome is excluded. For anyone whose file has been shaped by a model they never saw, that's a named right to ask a person.
The report also swaps the static list of vulnerability indicators for a dynamic definition and adds dedicated domestic and family violence provisions.
Worth noting: these are recommendations. COBA says it is reviewing them and will consult before a formal public response. Nothing is binding until the Code is amended. But the direction is set, and it matches where the Australian Banking Association already moved in July 2025.