Banks mishandle deceased estates

The Banking Code Compliance Committee (BCCC) has found that banks had poor practices and non-compliance with Banking Code of Practice around their handling of deceased estates.

Following its inquiry, BCCC said it would commence investigations into the compliance of three banks, which had been notified, with regards to their deceased estate obligations under the Code and said it expected the banks, which were not subject to the inquiry, to audit their practices regarding deceased estates.

The report also found that poor practices and non-compliance fell into three categories such as:

• Fees and charges for services no longer provided – Banks continuing to apply fees and charges to accounts of deceased customers despite being notified of their passing.
• Failing to act within timeframes – Banks failing to act on requests or instructions within the obligatory 14 days of receiving the necessary information.
• Lack of respect and compassion – Banks failing to treat representatives and family of deceased customers with the respect and compassion expected in the circumstances.

The BCCC’s chief executive, Prue Monument said that the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry showed a few years ago that banks had “a lot of work to do” and it was “reasonable for the community to have expected more progress and seen improvements sooner.”

“While we have seen work from the banks on this front, with some more progressed than others, clearly not enough has been done. Our report is a timely reminder for banks: they need to prioritise improvements in line with community expectations,” she said.

“Fixing the issues we identified will improve processes for consumers and help relieve the stress of managing the estate of a loved one. But doing so will also be good for banks.

“Failing to stop fees, for example, creates additional work and can contribute to a loss of customer goodwill and harm a bank’s reputation.”

The BCCC is an independent body that monitors bank behaviour and  has been looking at compliance with Code obligations for deceased estates since the provisions were introduced in the new Banking Code of Practice in 2019.

In its latest enquiry, the BCCC asked six banks to audit the way they managed deceased estates and conducted a survey of consumers and their representatives.

The inquiry involved all four major banks and two other banks.