Westpac breached Banking Code of Practice in NT branch closure, putting vulnerable customers at risk

Westpac breached Banking Code of Practice in NT branch closure, putting vulnerable customers at risk

Photo: Westpac, via Facebook.

The independent body tasked with keeping bank behaviour in check has found "serious and systemic" breaches of the Banking Code of Practice from Westpac (ASX: WBC) when it closed a branch in Tennant Creek, NT in September 2022, where it failed to give adequate assistance to its 3,398 affected customers.

The Banking Code Compliance Committee (BCCC) has sanctioned Westpac for the breaches, concluding its response to concerns raised by community groups was deemed insufficient and created further challenges, particularly for vulnerable customers such as the elderly or those for whom English is not a first language.

"The obligations set out in the Code are crucial for protecting customers when a bank branch closes," said BCCC chair Ian Govey AM.

"In this case, Westpac has fallen short of their promise to customers. Their actions have had a significant and detrimental impact on many people within the Tennant Creek community.

"Westpac’s failure to respond promptly to community concerns and provide adequate support was troubling and appears to have disproportionately impacted on vulnerable customers."

Westpac noted it had displayed posters, sent communications such as SMSs, letters and social media posts, secured a partnership to allow cardless cash and fee-free ATM services with another bank, and deployed a remote service team to provide on-the-ground for four weeks in October and November of 2022, and for three days in June 2023.

A Westpac spokesperson sent a statement to Business News Australia claiming the branch concerned needed to be closed "outside the standard process" in order to protect the group's people, in light of ongoing safety and security threats in Tennant Creek.

"These circumstances were specific to the Tennant Creek branch and included damage to our branch and ATM," the spokesperson said.

"Customers were notified of the closure and alternative banking options via SMS ahead of closure, as well as posters in the branch. We recognise more could've been done to fully support our customers during the closure. As a result, we have reviewed and strengthened our branch closure protocols.

"We continue to provide banking services to the Tennant Creek community. We have relocated and maintained an ATM in Tennant Creek, coordinated visits from our remote banking team, and supported customers through our Indigenous Contact Centre. 

The BCCC found that Westpac's communication strategy failed to provide detailed information about transition and support arrangements directly to customers, until it issued a letter 21 days after the branch closed.

"This delay was unacceptable given the branch was closed with no notice, leaving customers unprepared to transition to other ways of banking," the committee wrote in its findings.

"CatholicCare NT reported a significant number of customers affected by the branch closure, with up to 20 to 30 customers per day seeking CatholicCare NT’s assistance to access Westpac banking services immediately following the branch closure.

"Although Westpac deployed its remote services team at the end of October 2022, we do not consider the provision of one month on-the-ground assistance adequate to support customer transition."

The committee argued that the breaches, specifically of paragraphs 14 and 36 of the code, posed a high risk of harm to vulnerable customers who were not equipped to handle the transition with no notice or assistance, and its response to concerns from the community and the BCCC the bank was "inadequate and slow".

The BCCC’s sanction to name Westpac is the most severe action it can take in response to serious and systemic breaches of the Code and raising awareness among the community. This decision is proportionate to the gravity of Westpac’s failures and the need for banks to comply with the Code’s requirements when closing branches, particularly in remote areas.

"This decision sends a clear message to the banking industry that non-compliance with the Code’s standards will not be tolerated," says Govey.

"Banks must carefully consider the needs of its customers and provide the right support to adapt to new ways of banking."

The Westpac spokesperson says the group is committed to providing our customers and communities in regional Australia with access to banking services.

"Earlier this year, Westpac announced it would make no further branch closures in regional areas until at least 2027 – extending our existing moratorium to four years," the spokesperson said.

"We have also focused on co-locating branches in areas where we have two brands which can be brought together into one branch, with 104 co-located branches across the country."

The breaches concern the following paragraphs of the Banking Code of Practice:

Paragraph 14

We will comply with the ABA protocol when closing a branch. The protocol outlines our commitment to provide banking services to personal, and small business, customers in remote, rural and regional areas.

Paragraph 36

We will also assist our customers who reside in remote communities (including remote Indigenous communities) to access and undertake their banking services.

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