An inquiry into banks’ handling of deceased estates has found widespread charging of fees for services no longer provided on deceased customers’ accounts.
The Banking Code Compliance Committee said all six banks it reviewed continued to apply inappropriate fees and charges to accounts of deceased customers, despite being notified of their deaths.
Chapter 45 of the Banking Code of Practice, which covers deceased estates, requires banks to identify fees that are for products and services that can no longer be provided or will no longer be provided to a deceased person’s estate. They must stop charging those fees.
The BCCC said “a lack of clear definitions of fees in training and guidance materials proved a critical shortcoming for most banks in the overall management of deceased estates.”
It said the scale and proportion of these fees compared to each bank’s portfolio of deceased estates varied, but most had issues identifying fees that were being charged, as well as stopping the fees when they were identified.
The fees in question were associated with credit cards, personal loans, home loans and other products.
The BCCC’s chief executive Prue Monument said: “Several years ago now, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry showed that banks had a lot of work to do. It is reasonable for the community to have expected more progress and seen improvements sooner.
The BCCC said the banks committed to rectifying the errors and had plans in place to improve processes.
“While we have seen work from the banks on this front, with some more progressed than others, clearly not enough has been done,” Monument said.
In its review, the BCCC also found delays were common in responding to requests or acting on instructions from people managing a deceased estate.
It found “widespread poor practice and non-compliance” with obligations in the Code of Practice that relate to dealing with deceased estates.
It found inadequate systems, processes and procedures, “which made a difficult time worse for the bereaved.”
And “when customers needed understanding, the banks too often enforced a rigid interpretation of procedural steps, resulting in customers being burdened with unnecessary administrative tasks and bureaucracy.”
The BCCC said some banks were unaware of these issues until it inquired.
The report is based on the responses of six banks, which responded to information requests in November 2021 ad June 2022 and were subject to audits of their compliance with Chapter 45 of the Code. The report also draws on customer surveys.