Customer owned banks have been urged to review their approach to dealing with vulnerable customers ahead of changes to their obligations in a revised Customer Owned Banking Code of Practice that comes into effect in October.
The Customer Owned Banking Code Compliance Committee said very few of the 57 code subscribers have policies and processes that cover all of the vulnerable circumstances detailed in the new code.
The COBCCC has released the findings of an inquiry into how code subscribers handle vulnerability, including domestic and family violence, elder abuse and abuse of powers of attorney.
The COBCCC said many code subscribers reported that they have frameworks for addressing vulnerability, but said even subscribers with substantial vulnerability frameworks would probably have more work to do to ensure they comply with the new code.
“At the time of responding to the inquiry, fewer than half of all subscribers confirmed that they have vulnerability policies or processes relating to mental health, physical disability, serious illness, First Nations peoples or customers who are unfamiliar with banking products,” the COBCCC said.
“These vulnerability examples are specifically referenced in the 2022 code and subscribers need to be able to demonstrate they can identify and respond to customers experiencing these types of vulnerabilities.”
It said subscribers did better when it comes to policies relating to domestic violence and elder abuse but even in these cases there was a lack of detail.
It said all but two subscribers had policies for managing powers of attorney – often a source of elder abuse.
The COBCCC said most subscribers rely on frontline staff to identify vulnerable customers, while fewer than half monitor transactions for patterns such as uncommonly large transactions and transactions that occur at locations or for products that do not fit the customer’s profile.
Only four subscribers use data for all customers to identify potential vulnerabilities.
Among other findings, only 19 per cent of subscribers have a team or individual to oversee customers experiencing vulnerability, reporting to the board or executive committee is limited and fewer than one-third of subscribers have partnered with a community organisation specialising in helping vulnerable people.
The COBCCC said financial institutions are “uniquely well equipped” to identify vulnerability among their customers because of the transaction data they hold.