Banks break their own rules in failed direct debits: report
Major Australian banks are breaking their own rules by not canceling direct debit payments for household bills, according to a new report.
The Banking Code Compliance Committee (BCCC) released a study on Monday that found more than a dozen banks fail to properly cancel direct debit payments more than 29% of the time.
Direct debits – where consumers pay with their BSB and bank account numbers rather than credit or debit cards – are often used for utility bills, gym memberships, and to make mortgage payments. .
But BCCC boss René van de Rijdt said consumers are forced to jump unnecessary hurdles to control how that money is spent.
“People should be able to call their bank or go to a branch and say they need to stop a payment,” Van de Rijdt said. The New Daily.
“It could be the difference between putting food on the table or not. “
The BCCC is an organization created under the banking sector code to monitor whether banks keep the promises they have made to consumers.
His latest research used mystery shoppers to verify the bank’s compliance with a chapter of the code that describes policies for canceling direct debits.
The report comes after consumer groups accused banks of “cutting corners” in their response to the Royal Banking Commission last month.
Consumer Action Law Center chief Gerard Brody said the BCCC report is further proof that banks are breaking their promises to Australians.
“There has been a history of very poor compliance,” he said. TND.
“This provision is really important: it gives people control over their own finances. “
Lawyers are now calling for every bank to be named and ashamed of their direct debit failures.
Banks break their own rules
Direct debit is a popular method of paying regular bills and even online streaming service fees.
But the BCCC’s survey of 378 mystery shoppers found that it is easier to initiate a direct debit deal than it is to ask banks to cancel one.
Research found that bank staff often tell or suggest to buyers that they should ask merchants such as their gym to cancel their direct debits instead of the bank.
This is a prohibited practice under the Binding Code of Banking Conduct, which states that banks must let customers directly cancel debits.
Mr Van de Rijdt said these failures have real implications for Australians.
“There may be a payment due for a gym membership or streaming, but there could also be a payment due for a utility bill and one must take precedence over the other,” he said. he declared.
“You have to allow people to have a little financial control.”
BCCC research found that banks did not comply with direct debit rules 29% of the time on average, up from 80% in 2010.
This is a substantial improvement, but a big problem is that the big Australian banks are still among the worst offenders.
Although the report does not name the banks due to a controversial confidentiality clause in the BCCC charter, it does distinguish between “big banks”.
Major Australian banks typically include Commonwealth Bank, Westpac, National Australia Bank, and ANZ Bank.
A large bank had a non-compliance rate of 39% based on 74 separate interactions with mystery shoppers, which is well above average.
One of the other big banks had a 10% non-compliance rate.
Banks lack staff training
Mr Van de Rijdt does not believe that banks are intentionally breaking the rules.
Non-compliance boils down to failure in training frontline staff on the right policies, he said.
“It is important that banks enable frontline staff to meet these obligations through appropriate training and appropriate systems,” said Van de Rijdt.
The BCCC will now contact each bank individually with their results and ask them to improve their communication on direct debits with staff.
Some banks have listened to previous BCCC opinions on direct debits.
The organization praised NAB for updating its website to improve communication of its direct debit cancellation policy.
But the BCCC also said other banks still haven’t updated their websites.
“Three member banks appear to have little or no information available on direct debits or their cancellation,” BCCC said.
Name and shame to improve compliance
Mr. Brody said the performance of the big banks was “disappointing”.
He said compliance could improve if every bank is named and humiliated.
“Reputation matters,” said Mr. Brody.
“If they could name the banks, we might see some improvement.”
Mr Brody said banks’ compliance with other regulations improved after the business regulator ASIC began naming banks in its reviews.
The current rules do not allow the BCCC to name the banks on which it reports.
But advocates have called for the gag clause to be lifted in submissions to an ongoing review of the banking sector code.
Mr. Van de Rijdt said the BCCC supports these calls.
“We recommended that identifying banks would potentially increase compliance and healthy competition,” he said.
A spokesperson for the Australian Banking Association said it will meet with the BCCC to discuss the findings and improve banks’ compliance.
“The Australian Banking Association is committed to working with banks and the BCCC to identify ways to improve compliance,” they said.
“The ABA will meet with the BCCC and the banks to discuss this report in the near future.”