The Banking Code Compliance Committee (BCCC) wants to hear from people about their experiences acting as a guarantor for a loan, to check whether banks have improved their practices since a BCCC inquiry last year found serious failures.
The BCCC monitors banks’ compliance with the Banking Code of Practice, which includes obligations to ensure people make fully informed decisions before agreeing to be a guarantor. As subscribers to the Code, banks promise to meet these obligations. This follow-up inquiry will check whether banks have implemented improvements to deliver sustainable compliance and improved consumer outcomes.
“In light of the serious failures found, we made a number of significant recommendations to banks. We now want to see that banks have taken action to meet their Code promises to consumers,” the BCCC’s Chair, Ian Govey AM, said.
The BCCC’s report in August last year found that banks failed to consistently provide full disclosure of key information to guarantors. This failure was linked to poor record-keeping and challenges associated with disparate systems and processes.
“Improved assessment and disclosure processes would do a lot to resolve problems,” Mr Govey said. “We expect all banks to commit to implementing our recommendations where applicable.”
Ensuring consumers are fully informed prior to agreeing to guarantee a loan is essential, particularly when we consider how a failure to meet the guarantee obligations in the Code places consumers at risk, including at increased risk of financial exploitation.
“Meeting Code promises is not merely an administrative compliance activity. It has outcomes in the real world, especially when there are financial pressures,” Mr Govey said.
“We know how damaging financial exploitation and elder abuse can be and we know that improved practices from banks can help reduce risks.
“This follow-up inquiry will identify good practice for other banks to follow as well as highlighting areas that might need more focus and attention,” he said.
“We’re keen to hear about consumer experiences and details on how to do this are on our website.”
The inquiry will take place over the coming months with a report expected to be published in early 2023.
See BCCC website for more information.