This despite overall decline in breaches
A recent report from the Banking Code Compliance Committee (BCCC) has noted a troubling rise in breaches related to banks’ obligations to support customers facing financial difficulty, despite an overall decrease in breaches.
The report, Compliance with the Banking Code of Practice, covering January to June, found a nearly 40% increase in breaches of these critical obligations, amidst a 9% decline in overall breaches.
The sample breaches impacted 4.5 million customers, roughly half the number affected in the previous reporting period. As a result, the financial impact of these breaches decreased by $9.8m to $46.4m.
The report identified human error, deficiencies in process or procedure, and system errors or failures as the top three causes, accounting for 94% of all breaches, with human error alone responsible for 81% of reported breaches.
Some key findings from the BCCC report are captured in the graphic below.
Supporting customers facing financial difficulty
Ian Govey (pictured above), chair of the BCCC, commended the 9% decline in overall breaches but emphasised the need for increased efforts in supporting customers facing financial difficulty.
“While the overall decrease in breaches is positive news, more effort must be put into supporting customers facing financial difficulty,” Govey said. “The current state of increased living costs makes these obligations more important than ever, and we are concerned to see this increase in breaches.”
The report outlined instances where banks failed to respond to financial hardship requests, persisted in debt collection despite hardship arrangements, and neglected the terms of hardship agreements.
“Banks need to strengthen their commitment to supporting customers experiencing financial difficulty,” Govey said. “These breaches can lead to significant harm for individuals, particularly in this difficult time. Failing to provide adequate support can erode trust and confidence in the industry.”
BCCC encouraged banks to enhance staff training, systems, and procedures to better support customers facing financial difficulties.
Underreporting of breaches
BCCC also noted concerns about suspected underreporting of breaches.
“Underreporting breaches not only jeopardises a bank’s ability to identify and address issues and make improvements, but it also calls into question the industry’s commitment to the code and the principles of the self-regulatory model," Govey said.
BCCC emphasised its commitment to intensifying scrutiny in the upcoming reporting periods, particularly focusing on banks suspected of consistently underreporting breaches.
Read the full report on the BCCC’s website.
To compare results with the same period the previous year, click here; and for a look into BCCC’s annual report, click here.
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