COBCCC chair Jocelyn Furlan
The Customer Owned Banking Code Compliance Committee has welcomed an increase in reported breaches of the industry code, saying it reflects an improvement in reporting practices.
Last year, the COBCCC was highly critical of the sector, when it found that 13 of 55 Customer Owned Banking Code of Practice subscribers reported no breaches in the 2021/22 financial year.
It said at the time: “The COBCCC considers zero breaches to be highly unlikely and questions the adequacy and effectiveness of the monitoring and reporting systems and capabilities of customer owned banking institutions that continually report no breaches.”
The committee also said too many subscribers failed to report breaches under the appropriate provisions of the code, relying instead on a general “key promises” provision.
And it said there was a lack of detail about remedial action in breach reports. Around 75 per cent of breaches did not specify long-term remedial action.
Yesterday it released its 2022/23 data report, noting that only four of 57 code subscribers reported zero breaches.
COBCCC chair Jocelyn Furlan said: “This result is likely an indication of enhanced reporting practices and signals an improving commitment to self-reporting of breaches and complaints, which can only improve the customer experience and increase customer confidence.”
The report shows there were 4,624 breaches of the code in 2022/23 – up 82 per cent from 2,544 in 2021/22. Thirty-nine of the 57 subscribers reported more breaches. The financial impact of breaches was estimated to be $3.05 million.
Thirty-two breaches required urgent management attention and posed a serious risk to business operations.
There was a very large increase in breaches of obligations related to financial wellbeing (up 246 per cent). There was also a big increase in breaches of responsible lending obligations.
Furlan said: “More breaches of obligations regarding financial wellbeing and vulnerable people is troubling amid cost of living pressures.
“People are struggling at the moment and, to not exacerbate difficulties, we need our customer-owned banking institutions to meet their obligations in the code. We expect to see improvements in the coming year.”
Other common breaches related to privacy, not meeting key promises, and interest rates and fees.
The main causes of breaches included failure to follow processes and procedures, manual errors and system errors.
The COBCCC said there was a notable increase in banks failing to fulfil their obligations to ensure staff and agents receive adequate training.
The number of customer complaints received rose 25 per cent to 45,802.
Furlan said banks needed to analyse their complaints data and improve outcomes.
“Reducing the number of complaints that go to AFCA improves customer experiences and strengthens trust and loyalty,” she said.