In a move that could increase pressure on the Customer Owned Banking Association to widen coverage of its code of practice, Bank Australia has confirmed that it will sign on to the Australian Banking Association's new code from the start of July.A Bank Australia spokesman told Banking Day that the mutual would become a subscriber to the ABA's revised code when it takes effect on July 1."Bank Australia will sign up to the new ABA code and will remain a signatory to the COBA code as well, and we hope to see the two codes align strongly," the spokesman said."As the only member of both COBA and the ABA, we see value representing our customers and customer-owned banks in both forums, and we'll continue to do so."The decision means that Bank Australia's business customers will be the only borrowers in the mutual sector afforded the added protection of the ABA code's business lending provisions.Business borrowers with total loans of A$3 million or less are covered under the ABA code, which has a comparatively liberal definition of the types of organisations that qualify as a "small business".However, COBA's code appears more restrictive, with most business borrowers employing more than 20 full time staff not covered by its provisions.The only small businesses exempt from this rule are those operating in the manufacturing sector, which are covered if they employ up to 100 full time staff.Bank Australia's move to adopt the ABA code comes at a sensitive moment for the self-regulation in the banking sector.The Treasury department is currently consulting with banks and other industry participants on how it will implement recommendations from the Hayne royal commission to tighten code enforcement across the financial services sector.Treasury has already raised concerns about the preponderance of codes in the financial services sector (there are 12) and the ability of some organisations to avoid self-regulation by simply not subscribing to an industry body.However, Hayne has recommended that all codes should require ASIC approval and that remedies for breaches should be statutorily enforceable.The fact that the ABA code is already approved by ASIC could raise pressure on COBA to align the coverage of its code.It is possible - given Hayne's hard line recommendations concerning code reform - that Treasury might advise the next federal government to mandate that all approved deposit takers subscribe to a specified code.In the current regulatory climate, it seems unlikely that Treasury would accept that a lower level of protection should be afforded to some business lenders simply because they are customer-owned.That could have implications for an increasing number of mutual providers that have become active business lenders in recent years.While customer-owned banks are small players in the business lending market, a string of mutuals have begun to compete aggressively for SME borrowers to diversify their balance sheets.They include IMB Bank, Heritage Bank, Bank Australia and People's Choice Credit Union.According to the Mozo financial products database, each of these lenders is currently offering secured business loans that significantly undercut price offers from the