Australia’s banks could be subjected to enforceable commitments in the ethical use of data and technology under a review of the banking code that started today.
The banking code of practice, which is maintained by the Australian Banking Association (ABA), is independently reviewed every three years.
It comprises “a set of enforceable standards that customers, small businesses, and their guarantors can expect from Australian banks”, and “provides safeguards and protections not set out in the law.”
A “consultation note” attached to this year’s review of the code questions, among other things, whether the consumer data right (CDR) laws provide appropriate data protection mechanisms, or whether more stringent rules may be required.
“While banks can only share data when the consumer tells them to do so, consumer representative bodies have suggested there are issues regarding the safe and secure handling of data, particularly in the context of financial abuse, elder abuse, and domestic violence,” the consultation note states [pdf].
“More generally, banks are increasingly using digital technologies which offer many benefits for consumers but also raise a number of concerns if improperly used.
“Should the banks commit to the ethical implementation and use of technological developments?”
The review also raises questions over the effectiveness of the code relating to support for consumers during the Covid-19 pandemic.
While the banks offered various financial support, the consultation note questions whether or not vulnerable consumers, such as the elderly, could access some of the support available, particularly when it was offered through digital-only channels.
Due to health restrictions in the pandemic, customers couldn’t engage with their bank on a face-to-face basis, requiring banks to look out for those without access to digital methods of banking or for receiving communication.
A special note was added to the code in July last year stating that the effects of the pandemic may see banks unable to comply with timing restrictions regarding financial communication.
However, it is only in effect until September this year.
The code review is to be undertaken by Treasury veteran Mike Callaghan in consultation with consumer representatives, small business organisations and other stakeholders.
Submissions are due by early August with the final report to be released at the end of November.
“The code is a rulebook for banks that sets out clear rights for customers,” ABA chief executive Anna Bligh said in a statement.
“It is enforceable … and used as the standard by which the Australian Financial Complaints Authority considers customer complaints against banks, so getting it right really matters.”