In a report released today, the Banking Code Compliance Committee (BCCC) has stated the impact of COVID-19 on banks’ compliance with the Banking Code of Practice (the Code) appears to be less significant than expected. However, breaches overall increased significantly during the 2019–20 financial year.
The Report summarises banks’ self-reported breach data for the six months from January to June 2020 and represents the BCCC’s first opportunity to report on how the banks have handled their compliance obligations during the COVID pandemic. Breaches reported during this period showed COVID led to some delays in responding to customers’ complaints and requests for assistance. Overall, COVID-related breaches accounted for less than 5% of the total reported.
Banks reported over 40,000 breaches for 2019–20, split evenly over two six-month reporting periods – a 160% increase on the number of breaches reported compared to the 2018–19 period.
The BCCC Independent Chair, Ian Govey AM, said banks state the increase in breaches is a result of increased awareness and improved monitoring of Code compliance.
“The BCCC commends banks’ efforts to identify and fix Code breaches. However, we expect banks to do more to prevent breaches occurring in the first place, especially in areas where they have reported breaches in large numbers for many years. The BCCC’s recommendations in its Building Organisational Capability Report are intended to guide banks as they improve their root-cause analysis of breaches and explore effective preventative measures. Banks put too much emphasis on human error as the cause of most breaches and on training as the solution, where in many cases improved systems can reduce the risk of staff mistakes.”
The Code obligations most commonly breached by banks were commitments to train staff to understand the Code and be fair, reasonable and ethical in dealings with customers, privacy and confidentiality, responsible lending, debt recovery and assisting with financial difficulty.
The consistency of breach reporting remains a concern for the BCCC and it has welcomed work being undertaken by the industry to improve the reliability of breach data in the future.
The BCCC’s Report also includes, for the first time, an assessment of banks’ Code compliance monitoring activities for the reporting period.
Rene van de Rijdt
Acting Chief Executive Officer
Banking Code Compliance Committee
Further information about the Banking Code Compliance Committee is available on its website – bankingcode.org.au.
The BCCC’s report: Banks’ compliance with the Banking Code of Practice – January to June 2020 is available on the BCCC’s website under Resources and Publications > Reports.