Banks should recognise that anyone can become vulnerable: Submission to ABA Guideline on Customer Vulnerability

There are any number of reasons why a person would be unable to unwilling to speak up when they are struggling with their financial situation.

Who among us hasn’t faced a financial issue at one point or another?  It may be that your situation is only temporary, and you think that it will all pass in due course.  You might be doing your best to make things work with limited knowledge about the best way to navigate your situation.  There may be a range of factors outside of your control that have led to you being in debt.

Once people realise that they are vulnerable, it can be extremely difficult to admit that they’re struggling.  It takes a lot of courage to acknowledge when you are in a vulnerable situation, and the hesitation to speak up can be compounded when you are faced with admitting this to a complete stranger at your bank – even if you may be able to receive the assistance you need.

In our response to the Australian Banking Association’s (ABA) guideline ‘Every Customer Counts: Better banking for vulnerable customers’, Consumer Action Law Centre (Consumer Action) welcomes banks action on customer vulnerability and stresses that guidance should recognise that anyone can be vulnerable, and thus banks should, as far as reasonably possible, design systems, processes, service and products to respond to this reality.

It is essential that customers experiencing vulnerability are offered banking services that meet their needs and contribute to their social participation, rather than exacerbating their vulnerability.  Banks can implement staff training as well as improve processes and data systems that assist with identifying indicators of vulnerability for new and existing customers.  It will be important for banks to adopt an ethical framework to data collected, and only use data to assist customers.

Importantly, banks must inform and help consumers to access fee-free basic bank accounts when these are suitable options for their situation, whether the consumers are new or existing banking customers.

Consumer Action’s submission also recommends the following:

  • Banks should provide multiple channels of communication and proactively ask customers for their preferred methods of communication;
  • Banks should improve systems so customers do not have to repeat their story multiple times to access service and support;
  • Banks should not sell debt of customers experiencing vulnerability and/or on low incomes, but instead direct them to financial counselling and appropriate support services;
  • Banks should improve scam detection to block scam transactions and recover funds as they have the institutional knowledge to do so as compared to customers experiencing vulnerability; and
  • Aboriginal and Torres Strait Islander communities should be consulted in line with best practice to ensure the design of banking products meet community needs.

You can read the full submission here [PDF].

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