For the Banking Code Compliance Committee (BCCC), 2019–20 has been a year of two distinct halves.
It began with a sense of optimism, following our smooth transition from the Code Compliance Monitoring Committee (CCMC) to the BCCC and the release of the 2019 Banking Code of Practice (2019 Code). We also welcomed six new Code-subscribing banks, taking the total number to 19. As the year progressed, however, first the bushfires and then the COVID-19 pandemic unleashed a global health and economic crisis that continues to pose a significant threat to millions of Australians and present banks with unprecedented operational challenges.
The BCCC’s response to the pandemic has involved an approach that balances the needs of individual and small business customers with banks’ ability to meet those needs while operating in extremely difficult circumstances.
We have reminded banks of their obligations under the Code to treat customers in a fair, reasonable and ethical manner, and we are closely monitoring their compliance with these ongoing obligations.
At the same time, we have re-prioritised some of our planned monitoring activities to enable banks to direct their resources towards assisting customers in need. We have also provided banks with relief from certain BCCC obligations through the extension of reporting deadlines and by changing the scope of some of our work, including our data collection requirements.
Maintaining a strong Code monitoring program was a priority throughout 2019–20. As it was the BCCC’s first year monitoring the 2019 Code, much of our time was spent bedding in new ways of working and providing Code-subscribing banks with guidance on transitioning to, and complying with, the new Code. A key piece of work around this was our Transition Inquiry, which found that while banks committed significant time and resources to their Code transition projects, more needed to be done. This Inquiry has also informed several pieces of compliance monitoring work detailed elsewhere in this report.
In response to the inclusion of several enhanced protections for small businesses and farmers in the 2019 Code, the BCCC established an expert Small Business and Agribusiness Advisory Panel in April 2020. Panel members will provide guidance and advice on the experiences and needs of small business and agribusiness customers when engaging with banks, including how they are impacted by banks’ policies and procedures. The Panel will also support our efforts to monitor banks’ compliance with their obligations to small business and agribusiness customers by contributing their expertise to our inquiries and investigations, strategic planning, and stakeholder engagement.
Breach reporting remains a vital aspect of the BCCC’s compliance monitoring program, and our work this year included publishing the findings of banks’ compliance with the 2013 Code for the 2018–19 reporting period, as well as their compliance with the 2019 Code for the first six months of the 2019–20 reporting year. While both pieces of research show evidence of some improvement in banks’ breach reporting, we continue to see human error blamed for the vast majority of Code breaches. In an effort to address this, the BCCC initiated a project to develop guidance that will assist banks to build organisational capability and embed a culture of Code compliance. We will soon publish a report of the outcomes of this work.
The BCCC’s work investigating Code breach allegations was extensive this year. In addition to reviewing almost twice as many new breach allegations as the previous year, we have required banks to conduct internal and external audits to support our targeted investigations work. Most significantly, one of the six findings we made resulted in the BCCC naming a bank for serious and systemic non-compliance with the Code – the first time the BCCC has done so under our Charter (see page 14). The BCCC has not imposed this naming sanction lightly; we have given careful consideration to a number of factors, including the seriousness of the breaches and their likely impact on the bank’s customers.
The BCCC is in the concluding stages of an Inquiry into banks’ compliance with the guarantee protections in the 2013 Code which will have ongoing relevance in light of the similar obligations under the 2019 Code. Maintaining our focus on the treatment of customers experiencing vulnerability and small businesses, we have commenced an Inquiry into how banks consider vulnerability, inclusivity and accessibility throughout the entire consumer and small business banking experience. This includes the design of products and services, lending, financial difficulty, complaint resolution and debt recovery.
As we look towards 2020–21, the BCCC will continue to implement a risk-based approach to customer concerns, and conduct targeted investigations and inquiries into emerging issues and suspected serious and systemic misconduct. This work will includes monitoring how banks identify and treat customers who may be experiencing financial difficulty – key considerations in light of the ongoing impacts of the COVID-19 pandemic.
I take this opportunity to formally thank my predecessor, Christopher Doogan AM, whose final term as Chair of the Committee ended on 30 January 2020. During his two terms in the role, Chris worked tirelessly to drive best practice within the Australian banking industry. His efforts to improve and enforce banks’ understanding of the Code and the role of the Committee in monitoring Code compliance, as well as his oversight of the Committee’s transition to the 2019 Code, have been exemplary.
I would also like to thank my colleagues, Industry Representative Anne O’Donnell and Consumer Representative Gordon Renouf, for their invaluable insight and contribution to Committee activities during the year, and for their support of me in my first year as Chair.
Finally, on behalf of the BCCC, I extend my gratitude to Chief Executive Officer Sally Davis, Compliance Manager Liam Cronin and the secretariat staff, for their continued hard work and support of the Committee over the last 12 months.
Ian Govey AM
Banking Code Compliance Committee