ABA consults on dealing with vulnerable customers

The Australian Banking Association has initiated a public consultation that will result in the creation of a new industry guideline on supporting vulnerable customers, such as people who are fleeing violent relationships, living with disabilities, unexpectedly diagnosed with chronic illness, or at risk of elder financial abuse.

In a consultation paper, the ABA said the guideline should outline banks’ commitment to ensuring customers can access “appropriate banking products and services, which are suitable and fair for their circumstance”.

It should make it easier for such customers to inform their banks of the hardships they could be experiencing with confidence that they will be “treated with sensitivity, respect and compassion”.

The guideline is intended to “complement” the reformed Banking Code of Practice, which will come into effect on 1 July 2019.

There are four areas, as outlined in the consultation paper, that the ABA would like to consult on: communicating information with customers in a simple and accessible format and using plain English; designing products and services that are suitable and fair; the collection, use and management of information about customer circumstances; and ensuring staff have the appropriate training to support vulnerable customers.

The association acknowledged and expressed its support for commissioner Kenneth Hayne’s recommendation that it should amend the banking code to provide that:

• banks will work with customers who live in remote areas or who are not adept in using English, to identify a suitable way for those customers to access and undertake their banking;
• if a customer is having difficulty proving his or her identity and tells the bank that he or she identifies as an Aboriginal or Torres Strait Islander person, the bank will follow AUSTRAC’s guidance about the identification and verification of persons of Aboriginal or Torres Strait Islander heritage;
• without prior express agreement with the customer, banks will not allow informal overdrafts on basic accounts; and
• banks will not charge dishonour fees on basic accounts.

ABA chief executive Anna Bligh said: “There is no doubt the royal commission showed that banks need to lift their game when it comes to vulnerable customers, particularly in the design of products and offering of support services.

“Customers from all walks of life can experience vulnerability at one time or another; for example, exiting a violent relationship or an unexpected serious illness can make anyone financially vulnerable.”

Financial Counselling Australia chief executive Fiona Guthrie said it was “very positive” to see the banking industry working towards better supporting customers experiencing vulnerability or hardship.

“At some point in our lives, many of us could find ourselves in situations that make us vulnerable – financial hardship, physical or mental illness, relationship breakdown or even cognitive impairment as we age,” Ms Guthrie said.

“We need to know that our banks will be there to support us through the good and the bad times.”

The ABA is accepting submissions to the consultation by Friday, 10 May 2019.

[Related: Treasury consults on enforcing industry codes]