An independent review of Australia’s Customer Owned Banking Code of Practice is now complete, with a Final Report drawn up after an intensive consultation process.
Commissioned by the Customer Owned Banking Association (Coba), the final report was deliverd by independent reviewer Eva Scheerlinck of Scheerlinck Consulting.
Scheerlinck led an extensive review process, including a public consultation phase and the earlier release of an interim report that sought feedback on changes to the industry code for Australia’s mutual banks and credit unions – which requires a review every five years.
“The recommendations aim to clearly define the standards customers can expect while preserving the unique ethos of customer-owned banking – a sector defined by its commitment to the people and communities it serves,” said Scheerlinck. “This report is designed to give the sector the flexibility to keep evolving well beyond this review.
“This report was shaped by the generosity of everyone who took part, code subscribers, consumer advocates, financial counsellors and regulators alike. Their time and candour made sure the report is grounded in their experience.”
Key areas examined during the review included strengthening protections against financial abuse, supporting customers experiencing vulnerability, and enhancing the effectiveness of hardship assistance.
In the report, Scheerlinck notes: “Diversity is a genuine point of difference worth drawing out, but that proportionality should affect the method by which a bank meets a standard, not the standard itself. In practice, that means every customer is entitled to the same protection; how a bank delivers it, through automated systems, frontline staff or manual processes, can reasonably reflect its size and resources.
“A customer is entitled to the same protection regardless of the size of their bank. How a bank delivers that protection can sensibly reflect its scale and resources.”
And she warns the report must be forward-looking, in a world where “legal and regulatory environment shifts continually, and the way customers experience banking is being reshaped by technology, including the growing use of automated decision-making”.
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Scheerlinck finds room for improvement when it comes to serving First Nations customers. “The evidence gathered through this review showed a sector that still has a long way to go in understanding the structural barriers these customers face,” she wrote, adding that her recommendations “are built around the sector developing that understanding and cultural competency
progressively, not around assuming it is already there”.
Her recommendation here is that subscribers of the code “must take active steps now to understand the size and needs of their First Nations customer base, using information already available to them”, and “provide cultural awareness and cultural
safety training to all customer-facing staff, with additional role-specific training where engagement with First Nations customers is more frequent or complex”.
Her report also contains recommendations on how mutuals and credit unions deal with cases of financial hardship, calling for a plain-English definition of financial difficulty, and urging Coba members to maintain effective systems to identify financial difficulty, and to set defined timelines for handling hardship requests.
And there are recommendations on financial abuse, regarding the design of joint accounts and training staff to spot the signs of abuse taking place.
For farmer customers, she recommends that lenders do not charge default interest, or a fee in lieu of default interest, on a loan when a farm is in drought or natural disaster.
The report also covers technology and digital banking. Scheerlinck says the code should require subscribers to be “clear and
accountable in their use of automated decision-making, so that customers are not disadvantaged by the technology”.
She adds that the code should include: “a public branch closure protocol, requiring advance notice, a customer-impact assessment, genuine engagement with affected communities, and identified alternative service arrangements”.
And mutuals and credit unions should “risk-assess their own arrangement for delivering essential banking functions through a third-party service provider, in small communities and in communities where privacy, confidentiality or cultural safety considerations are material, including communities with a significant First Nations customer base, and to provide an alternative
confidential channel where that arrangement is unsuitable”.
Michael Lawrence, CEO of Coba, said the independent review is “an important opportunity to strengthen industry standards and deliver better outcomes for the more than 5.4 million Australians who choose customer-owned banking”.
“We thank Eva for her significant work and are grateful to all stakeholders,” he added, “including our members and consumer advocates – for their valuable contributions throughout this process.
“Robust consumer protections are important in today’s rapidly changing environment. We are reviewing the recommendations with interest and will carefully consider them as we work through the findings with our code subscribers.
“We look forward to continuing our engagement with stakeholders and will consult further as we develop our formal public response to the Report in due course.”
More information about the Code review is available at customerownedbanking.asn.au/code-review.
