Customer-owned banking institutions may need to step up support for consumers experiencing vulnerability as pressures on people increase and ahead of the introduction of more stringent obligations under a new Code of Practice, a new Report says.

You can download the Report here.

While saying many institutions are “well on their way” in their efforts, the report by the independent Committee that monitors the Customer Owned Banking Code of Practice calls for a “sharper focus” on customers experiencing elder abuse or family violence in particular.

It also suggests widening the ways of detecting customers who may be experiencing vulnerability, rather than relying solely on staff to recognise red flags or customers to identify themselves as needing help.

“Vulnerability can happen to anyone, at any time,” the Chair of the Customer Owned Bank Code Compliance Committee, Jocelyn Furlan, said in releasing the report. “It presents a significant challenge to all Australian businesses, including customer-owned banking institutions, whose very purpose is to improve the financial wellbeing of their customers and communities.”

Consumer vulnerability was placed firmly in the spotlight by royal commissions into financial services, aged care, the disability sector and family violence, the report notes. But the COVID pandemic and more frequent and severe natural disasters are only increasing the number of people experiencing vulnerability.

The new Customer Owned Banking Code of Practice to be released in October introduces more stringent obligations around how institutions respond to customers who are experiencing vulnerability because of circumstances such as age-related impairment, disability or mental illness, among others.

The study found about two-thirds of code subscribers reported having policies and processes in place that address vulnerability relating to elder abuse (63%) and domestic/family violence (60%). However, only 16% said this was a stand-alone policy solely about the management of customers experiencing this sort of vulnerability.

“The Committee expects this to be an area of focus for all subscribers as they continue to transition to the new Code,” the report says.

Ideally, institutions should have specialised support staff with the skills and experience to deal with the complexity of people in the variety of vulnerable circumstances, the report adds. Only one in five subscribers had a dedicated team or staff member.

Just four code subscribers said they were using data to help identify whether a customer might be vulnerable. The report suggests that initiatives like automated alerts could decrease the risk of frontline staff failing to detect signs of vulnerability, while also assisting early detection of fraud or financial abuse.

The Committee says that Code subscribers’ Boards should play a more strategic and proactive governance role in relation to customers in vulnerable situations.  It also encourages institutions to build partnerships with community organisations that go beyond sponsorships to tapping into their expertise in working with people experiencing vulnerability.

As at 30 April 2022, there were 56 subscribers to the existing Code of Practice. The report recommends that all subscribers review their vulnerability frameworks ahead of the introduction of the new Code in October.