Protection of customer payments 103-04050000

The Code of Operation: Recovery of debts from Services Australia income support payments or Department of Veterans’ Affairs (DVA) payments (the Code) is a non-legally binding statement of best practice between the 2 agencies and participating banks and credit unions. The Code guides the recovery of debts arising from overdrafts from bank accounts of customers in receipt of income support and/or DVA payments. The representative financial industry are:

• the Australian Banking Association (ABA) for member banks
• the Australian Finance Industry Association (AFIA)
• Customer Owned Banking Association (COBA) for member credit unions, mutual building societies and mutual banks.

The Code details the arrangements that apply when a customer’s account is overdrawn. The Code recognises that customers require a reasonable amount of money to live on in these circumstances and states that that participating financial institutions (also known as Authorised Deposit-Taking Institutions) will not impose unreasonable requirements for the repayment of money after direct credit of an income support or DVA payment.

The Code provides that:

• customers will be able to access at least 90% of their income support or DVA payment in any payment period even though their account may be overdrawn (the remaining 10% will be offset against the overdrawn amount, although the customer can agree to pay more than 10%)
• consultation will occur between the financial institution and the customer on the debt and levels of repayment.

Customers should contact their bank or credit union about the protection offered by the Code. A Centrelink Service Officer can act as a liaison officer to deal with any customer difficulties. The Process page contains more details on providing assistance.

Once a Services Australia payment has been paid into a customer's bank account, it is no longer a Services Australia payment under social security law. It is now part of the customer's funds.

A garnishee order on the account, even if it is equal to the amount of the customer's payment, is no longer covered by the inalienability provisions and is also not covered by the Banking Code of Conduct provision.

Social security law and family assistance law do provide for a 'saved amount' that cannot be taken. The saved amount is equal to the following:

• the total amount of the customer's payment, including advances, paid into the account in the 4 week period immediately before the order
• less the total amount withdrawn from the account in the same period.