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Flagging extra care needs

The impact of rising expectations

In an increasingly digital society, consumer data is one of the most valuable commodities that a bank encounters. Consumer data not only aids banks to better understand their consumer cohort (and their needs), but also aids in improving service offerings and the overall consumer experience. Due to its inherent value, there are strict rules in place about how consumer data can be collected, stored and used by banks. These rules are currently being challenged by consumer advocates and industry bodies who expect banks to record certain data so that the right level of support is provided to consumers experiencing vulnerability at the right times.

In this blog, we explore the rising expectations related to recording vulnerable circumstances and the different types of system flags available to record extra care needs. We also explore what the future landscape looks like in this space and how we can support banks in this ever changing environment.

In the past year independent reviews, industry bodies and international organisations have all identified the importance of recording consumer information related to vulnerable circumstances. They identified that adequate recording would facilitate inclusive service, provision of appropriate support and minimise the number of times that a consumer has to explain their vulnerable circumstances (alleviating any additional harm). Outlined below is some of the discussion that has occurred in this space. 

It is clear that expectations are increasing as to how banks collect and use consumer data to provide appropriate support. While expectations are rising however, there is limited guidance available for banks as to how to meet potential recording obligations while remaining compliant with privacy laws and requirements. As banks consider next steps, it may be beneficial to understand some of the system flags that may be available to record information relating to vulnerable circumstances.

We outline below three types of flags to record information relating to vulnerable circumstances: automated flags, manual flags and self-appointed flags. Appropriate use of system flags will help banks:

  1. Provide bespoke support to individual consumers;
  2. Minimise the number of times that a consumer needs to explain their vulnerable circumstances (including accessibility and/ or inclusivity needs);
  3. Monitor the outcomes for consumers in vulnerable circumstances, informing continual improvement of related processes.

Outlined below is a high-level description of the types of flags that can be deployed by banks. (Note: we do not explore all the types of system flags available, nor provide an exhaustive description of how they should operate, as each banks’ environment is different). 

Note: as indicated above, the introduction of a system flag may require significant technology uplift, process redesign and training. This may be expensive and take time to appropriately develop and deploy. There may be solutions available that banks can deploy sooner to help meet, as much as possible, the desired objectives during an interim period such as recording extra care provided to a consumer in a historic notes section (or equivalent) in the customer relationship management system (with appropriate consent).

The BCCC Inquiry Report identified that banks have privacy concerns recording information relating to vulnerable circumstances, particularly relating to the privacy principles around collecting and using personal and sensitive information with valid consent, and ensuring personal information is accurate, up-to-date and complete. However, despite concerns surrounding privacy laws and requirements, the BCCC “cautions banks against treating their privacy requirements as a barrier to providing the appropriate level of care to customers. The BCCC anticipates that the ABA’s work with the OAIC will address some of the banks’ concerns in this area”.8

The Australian Government is currently conducting a review of the Privacy Act 1988. Exactly how data requirements may change following this review, and in the wake of recent breaches of consumer data, to align with industry and consumer advocate expectations is unclear. It is a space that will be tracked closely as the privacy landscape adapts to protect consumers, especially those who may be experiencing vulnerability.

As the pandemic effects still linger and consumers face the uncertain economic environment and geopolitical tensions, more consumers than ever may experience one or more vulnerable circumstances. It is important that bank processes and policies are appropriately established to effectively support consumers in vulnerable circumstances in a manner that does not cause or exacerbate their harm. One way to do this is by recording their extra care needs due to vulnerable circumstances appropriately and compliantly to minimise the number of times a consumer has to provide the information. This will require considerations around systems, data privacy, and consent and notification practices.  

We can support banks as they consider how to meet the rising expectations of industry bodies, consumer advocates and, most importantly, their consumers. This support may include helping banks to understand their current state, identifying opportunities to uplift systems and practices; or, developing more tailored and pragmatic solutions.

  1. Independent Review of the Banking Code of Practice, Final Report (November 2021) page 14.
  2. As above, page 94.
  3. Banks’ compliance with Part 4 of the Banking Code: inclusivity, accessibility and vulnerability, Inquiry Report (December 2021) page 40.
  4. As above.
  5. ISO 22458:2022 - Consumer vulnerability (April 2022) paragraph 7.5.1.
  6. As above, page 23.
  7. As above, paragraph 7.3.3.
  8. Banks’ compliance with Part 4 of the Banking Code: inclusivity, accessibility and vulnerability, Inquiry Report (December 2021) page 41.