Following its review of selected financial services groups’ compliance with breach reporting obligations (REP 594), the Australian Securities and Investments Commission (ASIC) has identified “serious, unacceptable delays in the time taken to identify, report and correct significant breaches of the law among Australia’s most important financial institutions”.
Speaking to the media, Treasurer Josh Frydenberg echoed ASIC’s sentiment, claiming that the banks applied “too much discretion”.
“The time it took for the major banks to lodge a report with ASIC was too long,” the Treasurer said.
“It was around 150 days and [for] other financial institutions it was much longer and there was too much discretion on the part of these institutions as to what they lodged with ASIC and when they did so.
“[We’re] talking about these breaches that were very significant and they caused financial losses to consumers of around $500 million and there is more remediation that is going to need to be provided. So, obviously ASIC needs to work hard at this.”
In response to the findings, a CBA spokesperson told Mortgage Business that the ASIC report highlighted areas where the bank could “do better” for its customers.
“In particular, It makes clear that we need to be more accountable when we identify breaches and that we must act more quickly to compensate our customers.
“We must fix these issues to ensure we get it right for our customers. This report will help us do that.”
The bank also stated that it has made changes to detect and resolve issues faster, which it claimed would help refund customers as quickly as possible.
ANZ also told Mortgage Business that it has set up a specialist team to better manage how it identifies and fixes issues when they arise.
“We will look at this report closely to see if there are other areas where we can improve,” ANZ added.
NAB Group chief risk officer David Gall also said that the bank took its breach reporting obligations seriously and has been implementing improvements to the processes around identification, response and remediation of breaches.
“We want to be better for our customers,” Mr Gall said. “In recent years, NAB has worked hard to identify and investigate historical events as well as to improve the processes and systems supporting breach management.
“Since 2016, we have seen a reduction in late breach reporting to ASIC, with zero significant breaches being reported outside the 10 business day time frame for 2018.”
However, Mr Gall acknowledged that, in some instances, the lender had failed to report to ASIC in a timely manner, and claimed that NAB is committed to improving its reporting and remediation practices.
“While we are making progress, there have been instances where it has taken us longer than we would have liked to find and fix issues and remediate customers,” Mr Gall added.“There is clearly more to do.
“Recently, we established a new centre for customer remediation which will ensure that impacted customers are compensated more quickly.
“We are committed to continuing our work with ASIC to improve breach reporting standards and rebuild customer trust in our bank.”
CEO of the Australian Banking Association Anna Bligh has also weighed in, stating that the findings have served as a “wake-up call” to the banks.
“This investigation shows that banks’ efforts to identify issues, report them to ASIC and compensate customers is not good enough,” Ms Bligh said.
“Customers expect these problems to be identified and fixed as soon as possible. Clearly, this report shows there’s a lot of work to be done.”
Ms Bligh added that the banking industry has “fully cooperated with the ASIC Enforcement Review and has supported changes, including changes to civil and criminal penalties, and the regulator’s Close and Continuous Monitoring initiative.
Mortgage Business reached out to Westpac, but is yet to receive a response.
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Charbel Kadib is the news editor on the mortgages titles at Momentum Media.
Before joining the team in 2017, Charbel completed internships with public relations agency Fifty Acres, and the Department of Communications and the Arts.