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Six Australian banks, including the big four, have been found wanting when it comes to handling deceased estates, with an inquiry finding they continued to charge customers’ accounts even after being notified of their death.
In a report released on Friday, the Banking Code Compliance Committee (BCCC) said its review had found all six banks in its inquiry had charged fees for services no longer provided on deceased estates.
The compliance committee monitors banks to ensure they are following the Banking Code of Practice. The independent body’s chair, Ian Govey, said there were also other issues, including banks failing to act within the obligatory 14 days of receiving the necessary information, a lack of respect and compassion towards representatives and family of deceased customers.
Some major banks have recently cut mortgage cashbacks and raised interest rates for new customers.Credit: Karl Hilzinger
“While there were instances of good practice, and the issues varied across the banks, we found inadequate systems, processes and procedures were making a difficult time worse for the bereaved,” he said.
After the inquiry, the Banking Code Compliance Committee notified three banks that it would start investigations into their compliance with deceased estates obligations under the code of practice. It also said banks not subject to its inquiry were expected to audit their practices regarding deceased estates.
“We expect banks to understand their obligations and to ensure their management of deceased estates is fully compliant within 18 months,” Govey said.
The compliance committee chief Prue Monument said while some banks had progressed more than others following the royal commission four years ago, “clearly not enough has been done”.
“Several years ago now, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry showed that banks had a lot of work to do,” Monument said. “It is reasonable for the community to have expected more progress and seen improvements sooner.”
In March, six of Australia’s financial giants had paid or offered $4.7 billion to compensate customers who suffered loss or detriments after being charged fees for no service or receiving non-compliant advice.
The Banking Code Compliance Committee report said some banks noted the incidents found by the committee were exceptions that did not reflect the broader effectiveness and success of their current systems and processes.
“While they recognised the poor practices and non-compliance with the code that the inquiry identified, they viewed many of these instances as aberrations rather than the norm,” the report read.
The committee made nine recommendations including better training for staff to communicate with sensitivity, respect and compassion when dealing with representatives of dead customers and having a documented end-to-end quality assurance and control system for the process of managing deceased estates.
Monument said fixing the issues identified in the report would be beneficial not only for customers, but also banks. “Failing to stop fees creates additional work and can contribute to a loss of customer goodwill and harm a bank’s reputation,” she said.
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