Breaches of the Code of Banking Practice have almost doubled in the past year, with breaches in credit assessment increasing 260%.
According to the latest Code Compliance Monitoring Committee (CCMC) Annual Report, 9415 breaches of the Code of Banking Practice were reported in the 2012-2013 financial year. This is a significant jump from the 5794 recorded in 2011-2012, and close to four times the figure recorded in 2010-2011 (2,541).
CMCC chairman Brian Given said the details indicated that “generally the banks are continuing to improve their self-monitoring and reporting of code breaches and customer complaints”.
“On this occasion there has also been an increase in matters reported to the CCMC for investigation,” said Given.
Two banks accounted for 72% of all reported breaches, said the report.
The largest increase in breaches was in the credit assessment category, in which 1499 breaches were reported, up from 331 last year.
“This increase is primarily due to one bank’s activities in implementing stricter monitoring and more detailed reporting of non-compliance with internal credit provision policies and procedures which related to this provision,” said the report.
This is linked to a further category surrounding financial difficulty. There were 297 breaches related to financial difficulty, compared to 191 in 2011-12. One of these was deemed a ‘significant breach’.
One bank self-reported 78% of the breaches. The bank has since taken remedial action in this regard, said the report.
The CMCC plans to commence an Inquiry into financial difficulty obligations mid next year.
There were 12 significant breaches reported, which was two more than during the previous year. Significant breaches are ones where a large number of customers are affected, the breach occurs frequently, customers are exposed to potential loss, or an event indicates inadequate compliance arrangements.
Three of the significant breaches involved client confidentiality, one involving a mortgage statements mailed to incorrect addresses, and another two involving sensitive customer information emailed to a group of clients.
The number of complaints increased by 11% over the past year to 898,000.
The proportion of complaints resolved in less than 5 days improved from 83% to 88% and the proportion of complaints taking over 45 days to resolve decreased from 3% to 2%.
“It should be noted however that the results of the current year were favourably impacted by systems change at one bank,” said the report.
The CCMC conducted two own-motion inquiries. It looked at how well banks were meeting their obligations for pre-contractual disclosure in relation to guarantees. And it identified a number of areas of good industry practice, such as conducting interviews with prospective guarantors to make sure they understood the commitments and risks of going guarantor.
Requests for financial difficulty assistance increased 5.3% to 270,000.