Despite a decline in breaches overall, the latest report from the Banking Code Compliance Committee (BCCC) shows a concerning increase in breaches of bank obligations to support customers facing financial difficulty.
The report, Compliance with the Banking Code of Practice for January to June 2023, notes that breaches of obligations for dealing with customers facing financial difficulty have increased by nearly 40%.
This comes amidst a 9% decline in overall breaches, signalling a welcome success in efforts to improve practices.
Chair of the BCCC, Ian Govey, urged banks to address the breaches of obligations for dealing with customers facing financial difficulty.
"While the overall decrease in breaches is positive news, more effort must be put into supporting customers facing financial difficulty,” Mr Govey said.
“The current state of increased living costs makes these obligations more important than ever, and we are concerned to see this increase in breaches.”
The report highlighted instances of banks failing to respond to financial hardship requests, persisting with debt collection despite hardship arrangements, and neglecting the terms of hardship arrangements.
“Banks need to strengthen their commitment to supporting customers experiencing financial difficulty. These breaches can lead to significant harm for individuals, particularly in this difficult time," Mr Govey said.
“Failing to provide adequate support can erode trust and confidence in the industry.”
The BCCC urges banks to prioritise improvements in staff training, systems, and procedures, emphasising it is imperative to detect compliance issues.
The report also notes concerns about suspected underreporting of breaches.
“Underreporting breaches not only jeopardises a bank’s ability to identify and address issues and make improvements, but it also calls into question the industry’s commitment to the Code and the principles of the self-regulatory model," Mr Govey said.
The BCCC stressed that over the coming reporting periods it will increase its scrutiny of the banks that may have been consistently underreporting breaches.
For media inquiries, please contact firstname.lastname@example.org.
The Banking Code Compliance Committee is an independent body responsible for monitoring and enforcing compliance with the Banking Code of Practice. The Committee strives to maintain high industry standards and protect the interests of consumers in the Australian banking sector.