BCCC flags concerns over Code breaches

The Banking Code Compliance Committee (BCCC) in a message from chair Ian Govey has acknowledged the efforts by Australian banks after it recorded a 9 per cent overall decrease in breaches, however, the BCCC’s optimism is “tempered” by a 40 per cent increase to breaches of part 9 of the Code.

This part of the Code relates to crucial obligations to support customers facing financial difficulty. The BCCC has deemed the increases in these breaches as “alarming”.

“In a time marked by escalating inflation and living costs, the imperative for banks to provide support to customers in financial difficulty cannot be overstated,” Mr Govey said.

“Breaches of these obligations can lead to serious consumer detriment.”

According to the BCCC, banks have failed to respond to financial hardship requests and have persisted with debt collection activities despite hardship arrangements being put in place, along with neglecting to follow through on agreed upon arrangements.

Earlier this year, major bank Westpac was targeted by the Australian Securities and Investments Commission (ASIC) for allegedly seizing property from those it failed to process hardship requests from.

ASIC alleged that Westpac had failed to process 229 hardship applications within 21 days between 2015 and 2022.

“Such failings not only breach Code obligations, but they also contribute to a decline in trust and confidence in the industry,” Mr Govey added.

“Banks have had ample time to anticipate the surge in financial hardship requests and implement measures to manage them effectively.

“As we move into the next reporting period, we expect the industry to prioritise improvements in staff training, systems, and procedures to better support people in need during these challenging times.”

Additionally, the BCCC has flagged yet another emerging concern being a suspected under-reporting of breaches.

Mr Govey stated that under-reporting breaches signals risks with “inadequate processes and systems or lack of commitment to Code obligations”.

He added that it undermines the ability of banks to identify and correct issues and enhance customer outcomes, which “jeopardises the efficacy and benefits of the self-regulatory Code”.

“We will continue to monitor the progress and outcomes of the industry’s response to these challenges,” Mr Govey said.

“We know that banks have a range of ways to support customers experiencing financial difficulty. They need to do more to provide that support fairly and consistently.”

[RELATED: Westpac allegedly seized property from those requesting hardship]