In an era where financial stability is as precarious as it is precious, the trust we place in our banks is paramount. Yet, for many Australians, particularly those over 50 who are navigating retirement savings, investments, and fixed incomes, the recent behaviour of some of the nation’s largest financial institutions may be cause for concern. Banks could soon find themselves in the hot seat, named and shamed for failing to provide adequate support to customers grappling with the rising cost of living.
The spotlight on the banking sector intensified following a series of unsettling revelations. Some of the Big Four banks have come under fire for egregious practices, such as charging fees to deceased customers’ accounts and abruptly closing branches, leaving communities stranded without essential services. These actions have not only tarnished the reputation of these banks but have also raised questions about their commitment to customer care.
In response to these concerns, the Australian Banking Association (ABA) has introduced an updated code of practice, which took effect on Friday. This revised code is more than just a set of guidelines; it’s a pledge to restore faith in the banking system by offering stronger safeguards for customers and promoting a culture of trust.
One of the key updates to the code is an expanded definition of small businesses, now encompassing an additional 10,000 enterprises. This change allows more businesses to benefit from the protections and support offered by the code, including the ability to carry an extra $2 million in debt before losing their ‘small’ status.
Anna Bligh, the ABA’s chief executive, has emphasised that the updated code sets new standards and simplifies existing ones to ensure that customers know exactly what to expect from their bank. She highlighted the clearer guidelines on how banks will assist customers facing financial hardship, including the arrangements that can be put in place to help them recover.
The code also introduces new commitments to inclusivity and accessibility. Banks are encouraged to provide external support, such as translators for customers with limited English proficiency, and to train staff to recognise when customers may qualify for low or no-fee accounts.
However, it’s worth noting that the code is not legally binding. Instead, it relies on the principle of public accountability. The most severe penalty for breaching the code is a public naming and shaming, which is intended to pressure banks into compliance by leveraging their concern for public image.
This approach has already been put into practice. ANZ was publicly named and shamed in July for ‘deeply concerning and significant deficiencies’ in its compliance frameworks, including imposing fees on deceased customers and not processing refunds promptly. Westpac faced similar censure in June for inadequate customer support following the closure of a branch in the remote Northern Territory community of Tennant Creek.
The Banking Code Compliance Committee may also refer serious or ongoing systemic breaches to the Australian Securities and Investments Commission.
What has your experience been like with your bank recently? Do you believe that the updated code of practice will lead to better customer service? We invite you to leave your comments below and join the conversation.
Also read: How banks are responding to Reserve Bank decision to cut interest rates
