Credit Australia – Are You One of The People Not Being Helped by the Banks?

Australia’s voluntary banking code, built to protect consumers, is up for review amid concerns bank customers facing financial trouble are not being helped. codigo dos bancos

The Code of Banking Practice, which has been adopted by almost all of Australia’s banks, provides a framework of best practice for banks when coping with individuals and small businesses. The code is legally binding on signatory banks. 

A top financial watchdog, The Banking and Economical Services Ombudsman, reports some banks need to increase the way they deal with customers facing financial hardship.

Among its set of concerns were reported cases of bank staff failing to respond to customers facing financial hardship, and declining to provide customers with the necessary information to get help. In some cases the customer needed to use the words ‘financial difficulty’ and ‘hardship’ before bank staff responded.

The BFSO also felt some banks were being unhelpful by failing to give customers enough the perfect time to come back the required paperwork, and threatening them with debts collectors if they failed to return documentation on time.

A number of bank customers have recently been required to dip into their superannuation pots before an application for help has been accepted regarding to BFSO.

A amount of banks also have failed to help customers with small business or investment loans, which they are required to do so under clause 25. 2 of the code.

A great example cited by the BFSO in the quarterly bulletin, described an episode where a bank customer renegotiating a loan found his bank had shown non-payment against his bank account before negotiations for assistance were over. It also told showing how this individual had been repeatedly called by the bank’s collection department.

Another customer was asked to provide medical evidence to back up a claim of financial hardship caused by an illness.

The BFOS has advised a number of banks, it considered to be failing to conform with the banking code’s provisions for consumers monetary difficulty, to update their procedures to ensure genuine consideration is given to customer’s individual circumstances. They will also advised banks to provide written reasons to customers for declining demands for help with financial problems, and train personnel to recognise when a customer is experiencing financial difficulties.

Another financial enterprise with jurisdiction over the Code of Banking Practice has said it looks at failings not to be with the code itself. The Code Compliance Monitoring Committee (CCMC) takes the view the banking code has set a higher standard for banks, that they are working towards.

“In the CCMC’s view, the code has, overall, worked well to encourage subscribing banks to formulate and implement policies and procedures to improve their handling of customers in financial difficulty, ” it said.

The CCMC echoed the experience of the BFOS, stating it was aware some bank customers haven’t been informed of hardship provisions.

The review of the Code of Banking Practice should be completed by the thirty first of May 2008. Amongst the issues it will examine are: how the code has operated since its last review; what barriers, if any, are present to stop banks enrolling; and how any problems banks or customers face in interpretation or knowledge of the code can be tackled.