Posted: 14 Feb. 2022 15 min. read

Preparing for vulnerability

How industries can protect (in real time) consumers experiencing hard times

In 2022 we expect the impact of lockdowns, quarantine and social isolation will continue to be felt, with more consumers potentially experiencing greater vulnerabilities.  In order to prepare for the new year (and new normal), organisations should enhance their consideration and preparedness of vulnerability within their own business and of their consumers.

As 2022 commences, many industries are breathing a sigh of relief after several complex and comprehensive regulatory reforms have gone live while organisations are continuing to manage the impact of COVID. During this period of reflection, and whilst planning work schedules and priorities for 2022, it is important for organisations to plan their programs of work with a vulnerable consumer lens.  In late 2021, the Independent Review of the Banking Code of Practice released its final report (the Report). The Report focused on how important it was for banking institutions to effectively identify, monitor and protect consumers experiencing vulnerability, including those under-recognised in our community, to create inclusive and accessible banking. The Report presented several recommendations to improve the Banking Code of Practice (the Code) and outlined implications for the Code from recent regulatory reforms. While the Code applies to banking institutions, some recommendations are industry agnostic and appropriate for the broader financial services sector to consider.

To aid organisations as they prepare for 2022, we explore below -

  1. the key takeaways from the Report; and
  2. the no-regret activities that organisations can commence now to address some of the challenges to protecting and supporting consumers experiencing vulnerability.

Report takeaways

In July 2021, Mike Callaghan was engaged by the Australian Banking Association (ABA) to conduct an independent review of the Code as required every three years. Mr Callaghan was asked to assess whether the Code (1) contributes to inclusive, affordable and accessible banking services for all consumers, (2) meets consumer and community standards; and (3) effectively ensures consumers are aware of basic, low and no fee accounts. The Report presented several recommendations1 as to how the Code, and industry, may be improved for vulnerable consumers. The below table details some of the recommendations.

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The Report recommends several updates to the Code, and to the banking industry generally, to better identify, manage, monitor and protect consumers experiencing vulnerability in the community. The Report does not identify the challenges that organisations may encounter when addressing the proposed improvements, nor present any strategies for how to dynamically address the present difficulties. For example, how will organisations proactively identify consumers experiencing vulnerability while obeying legal principles related to privacy and consent without displaying prejudice? Industry bodies, regulators and legislators will need to be pragmatic about the way these rules will be drafted and implemented to ensure the change is positive and impactful for society.

Areas of challenge

In our previous blog we explored three key areas of challenge that all organisations may face in relation to managing and embedding fair treatment of vulnerable consumers. These challenges are outlined in the below diagram.

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We believe once these three primary areas have been considered, organisations will be ready to review, update and embed changes to the ways they identify, manage, monitor and protect consumers experiencing vulnerability.

In the following section, we consider some potential solutions to these challenges including no regrets activities that organisations can begin based on the recommendations in the Report.

No-regrets activities

As the ABA and other organisations work through the Report recommendations, organisations can proactively take steps to manage and embed the fair treatment of vulnerable consumers within their business now. Below are a few key no-regrets activities organisations can get started on to uplift their vulnerable consumer framework and approach, including how we can support.

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Next steps

As 2022 commences, many industries are breathing a sigh of relief after several complex and comprehensive regulatory reforms have gone live. During this period of reflection however, it is important for organisations to plan their programs of work with a vulnerable consumer lens. It can be useful to look to the FCA’s guidance and United Kingdom model, where many organisations have effectively embedded vulnerability considerations across the value chain, rather than as a standalone concept.

We believe organisations that prepare now, and establish their business so consumers experiencing vulnerability are treated fairly, will be ready when recommendations in the Report are implemented in the Code and across the industry. More broadly, any organisation that considers what to pack will be in a better position when the journey begins to change the way Australian businesses approach consumers experiencing vulnerability.

If you would like to know more about how the Report could affect your organisation, or how to commence the above no-regrets activities, please contact us.

In our next blog we will explore further how organisations can identify, monitor, manage and support consumers experiencing vulnerability using data.

[1] Recommendations are located in Section 13.6 of the Report.

Get in Touch

Rosalyn Teskey

Rosalyn Teskey

Partner, Audit & Assurance

Rosalyn is a partner in Deloitte's Melbourne office in the Governance, Regulation and Conduct practice. She specialises in supporting firms to design and assess frameworks to treat customers fairly, including the development of conduct, product governance, sales practices and complaints handling frameworks. Rosalyn co-leads our Accountability practice and leads Deloitte’s Design and Distribution and product governance offering.

Josephine Tan

Josephine Tan

Director, Audit & Assurance

Josephine is a Director in the Governance, Regulatory and Conduct practice based in Melbourne. She specialises in supporting businesses manage operational risk and compliance across the end-to-end product lifecycle and customer journey. Josephine also helps businesses navigate the complex regulatory environment by providing pragmatic advice and sustainable solutions. Her key focus is to promote preventative conduct and positive customer outcomes within the financial services sector.

Julia Younger

Julia Younger

Senior Analyst, Audit & Assurance

Julia is a Senior Analyst in the Governance, Regulation and Conduct practice based in Brisbane. She specialises in large and small transformation projects, uplifting frameworks, practices, policies and procedures to effectively embed regulatory change. Julia also has experience in commercial litigation in Australia and England.

More about the authors

​Sarah Russo

​Sarah Russo

Partner, Audit & Assurance

Sarah is a partner in Deloitte's Brisbane office in the Governance, Regulation and Conduct practice. Sarah is a highly qualified and experienced risk, assurance, regulatory and governance professional, having worked as a financial services lawyer, risk manager and with both APRA and ASIC. Sarah works predominantly with financial services clients assisting with governance, regulation and conduct matters including BEAR/FAR implementation, Design and Distribution Obligations, regulatory reviews and change programs, remediation, breach reviews and internal audit programs.

Sharmila Lakshman

Sharmila Lakshman

Senior Manager, Audit & Assurance

Sharmila is a Senior Manager in the Governance, Regulation and Conduct practice based in Sydney. She is a lawyer and has experience supporting clients predominately in the financial services sector in governance and accountability, regulatory compliance, product design and distribution, and customer advocacy. Sharmila is focused on delivering simple and innovative solutions to clients that promote preventative conduct and good customer outcomes.

More about the authors

Kavir Kalian

Kavir Kalian

Senior Manager, Audit & Assurance

Kavir is a Senior Manager in Deloitte’s Governance, Regulation and Conduct Practice. He specialises in supporting banking, insurance, superannuation and wealth management clients navigate through regulatory change, with a focus on designing and implementing conduct frameworks.

Holly Webb

Holly Webb

Manager, Audit & Assurance

Holly is a Manager in the Governance, Regulation and Conduct practice based in Sydney. She specialises in supporting clients across the insurance sector with dispute resolution and focusses on preventative conduct and promoting good customer outcomes.