The Banking Code Compliance Committee (BCCC) has published its report on compliance with the Banking Code of Practice for the January to June 2023 reporting period.
In this reporting period, there was an almost 40% increase in breaches related to Part 9 of the Code, which contains the obligations to support customers facing financial difficulty.
Banks reported failing to respond to financial hardship requests, persisting with debt collection activities despite hardship arrangements being in place, and neglecting to follow through on agreed-upon hardship arrangements.
Examples of breaches include:
• One major bank failed to promptly respond to financial hardship enquiries from seven customers which resulted in a total financial impact of $63,727.
• One major bank failed to deal with a customer’s financial representative, as requested by the customer. This resulted in a financial impact of $13,935.
• One major bank failed to respond to a customer’s request for financial hardship assistance within the required timeframe. This affected the customer’s comprehensive credit report and resulted in a financial impact of $5,508.
The top three causes of reported breaches were human error, deficiency in process or procedure
and system error or failure. These three causes account for 94% of all breaches.
Identifying breaches
Banks identified 50% of reported breaches through Line 1 monitoring and quality assurance processes.
Five of the 17 banks identified more than 50% of their breaches through customer complaints.
The top three breaches by financial impact were:
• One major bank set up repayments incorrectly for loans it had approved. This had a financial impact of $12 million, and the bank is still investigating the number of affected customers.
• One major bank charged additional interest on home loans due to missing offset account data. This had a financial impact of $2.3 million and affected 262,600 customers.
• One major bank reported that additional cardholders were incorrectly allowed to spend on customer accounts after being removed as additional cardholders. This had a financial impact of $2.1 million and affected 18,600 customers.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
