Privacy laws are restricting banks’ abilities to effectively deal with cases of financial abuse, Australia’s second-largest bank has told a federal inquiry.

The Parliamentary Joint Committee on Corporations and Financial Services is examining the effectiveness of existing laws and the role that banks can play in identifying and preventing various forms of financial abuse

The committee sat in Adelaide on day three of its public hearings on Tuesday and heard first from two Westpac representatives, who said privacy legislation was too restrictive.

Westpac’s Group Customer Advocate, Adrian Ahern, told the committee about a recent example of financial abuse that had been picked up through Westpac’s internal alert system.

“We had a customer who appointed her son power of attorney, over the last couple of weeks he had transferred $150,000 in three or four payments from his mother’s account to his account,” Mr Ahern told the committee.

“We were able to speak to our customer, his mother, she said he was not entitled to the money so we revoked or suspended his access to his mother’s account, we took the funds from his account and returned them to her account and then suggested she take some legal advice about revoking her power of attorney.”

Mr Ahern said the bank should be able to report such instances to other financial institutions, authorities and services.

Group Customer advocate Adrian Ahern told the committee about a case of a mother whose son was taking money out of her account.(ABC News)

“This is a perfect example of the sort of circumstance we’d love to be able to report to an adult safeguarding authority who could objectively get all the facts to investigate and take action, but, like many of the submissions have said to this inquiry, the Privacy Act stands in the way of that.”

“We spoke with [the son] and he said: ‘oh, I was appointed power of attorney, Mum’s got spare money I thought I was able to take that money and that wouldn’t be a problem’ so maybe there’s an issue around POA education,” Mr Ahern said.

The inquiry heard that if the woman’s son had transferred the money to an account with a different bank, Westpac would not have been able to recover the funds. 

“We actually wouldn’t have been able to recover that money because under the privacy legislation we can’t go and contact another institution to find those funds or recall those funds,” General Manager of Customer Solutions Lisa Pogonoski told the committee.

Scam system could be good model to replicate

Ms Pogonoski told the committee that the very sophisticated framework that exists between banks to deal with scams and fraudulent financial activity had not yet been replicated in terms of dealing with instances of financial abuse.

“The analogy to scams is an interesting one because we actually have quite a developed ecosystem between the banks to be able to send messaging between the banks and to effectively be able to chase funds,” Ms Pogonoski said.

“In recognising fraud and scams as a crime, and scams as a major social issue, that ecosystem has been built, we don’t yet have a similar ecosystem for financial abuse.”

General manager of Customer Solutions at Westpac, Lisa Pogonoski, says privacy laws made it difficult to address some cases of financial abuse.(ABC News)

Ms Pogonoski said this created “blind spots” for perpetrators to take advantage of.

“In a similar way [to scams] we have customer’s money flowing out of the visibility of an individual bank without the ability to work across the banking network to recover it,” she said.

“In financial abuse cases we’re trying to solve a complex puzzle with many missing pieces.”

She said the bank would support legislative reform to close those gaps.

“There are many information gaps that provide challenges for banks in identifying financial abuse. I don’t like the term blind spot, but that’s what they are,” she said.

“Access to relevant information enables us to identify risks of financial abuse faster, so we can deploy our specialist care teams and this is when we’re at our best.”

Alert system identifying perpetrators

Mr Ahern told the committee that Westpac had recently introduced heightened monitoring of customer accounts with power of attorney orders, which has proved useful in detecting instances of financial abuse.

“Since then we have alerts of about 150 per day, that may seem like a lot, there are a lot of false positives in that, but we’d rather cast the net wide than have a narrow net,” Mr Ahern said.

The committee met at the Adelaide Town Hall on Tuesday, before it moves to Perth on Wednesday.(ABC News)

“Coming out the 150 alerts each day we further investigate around a handful, maybe four or five, and coming out of that there may be one or two every few days where much further work needs to be done and contact needs to be made.”

Ms Pogonoski told the inquiry the bank, which has almost 11 million customers, has a team of 1,400 customer care specialists, with 290 staff on its hardship team and 54 specialists who deal with “more concerning cases”.

On Tuesday morning, the committee met with some of the specialist Westpac team members in Adelaide.

“Our mantra is to provide help and care in the moments that matter, and this care is critical when a customer is experiencing family and domestic violence or financial abuse.”

“We’ve definitely seen an increase in the customers who have financial abuse challenges as well as financial hardship,” Ms Pogonoski told the committee.

“Yesterday I was speaking to one of our frontline team members, Sandy, who received a distress call from a customer asking for a loan repayment to be reversed,” Ms Pogoniski told the committee.

“She desperately needed money for food and petrol because she was escaping, with her children, from a family violence situation.

“Sandy confirmed the customer’s email was secure then promptly provided vouchers for food and petrol and referrals to local support services.”

“So far this year we’ve helped around 3,000 customers experiencing financial abuse, the majority are women and all of them have emotional or physical harm.”

“This team is our best of the best, each member has deep experience and passion for helping people and I would back the capability and compassion of this team above any other like service in Australia.”

Chair, Senator Deborah O’Neill asked the committee about the impact of branch closures.(ABC News)

Bank questioned about impact of branch closures on vulnerable communities

Senator Deborah O’Neill questioned Westpac’s representatives about the impact that branch closures had on remote communities with vulnerable populations, citing a submission that the shift away from in-person to online banking services had allowed financial abuse to “flourish”.

The committee heard there had been more than 400 branch closures across Australia, including 122 branches in regional and remote areas, with branch numbers declining by 37 per cent overall since 2017.

“The physical reality of interactions between human beings is something we haven’t lost sight of as being important factor in prevention of financial abuse,” Senator O’Neill said.

“Financial abuse observed by somebody in your bank network is a point of opportunity for Westpac, or any bank, to intervene rather than wait for the person who is in an abusive situation to actually phone the agency to engage, there is a potential outreach moment that has now dissolved across multiple banks.”

Ms Pogonoski told the committee that Westpac staff were trained to identify “customer vulnerability”.

“The data that we have doesn’t show us there’s a correlation between branch closures and missing of financial abuse from the organisation’s perspective,” Ms Pogoniski told the committee.

“I want to be reassured by that, but many submissions to this committee would dispute that,” Senator O’Neill responded.

Senator O’Neill also asked Ms Pogoniski about the sanction Westpac was given by the banking watchdog over its decision to close its remote Tennant Creek branch in the Northern Territory.

“We recognise that the Tennant Creek closure was outside of our usual practice, we had concerns for our people’s safety, so that was our major concern,” Ms Pogonoski said.

“We recognise that, on reflection, we could have done a better job, we could have engaged the community further, so we’re continuing to look at how we can support Tennant Creek through having services available, but absolutely recognise that, on reflection, we could’ve done more.”

Earlier this year, Westpac reversed its plan to shut eight regional branches across Australia.(ABC News: Brendan Esposito)

Senator O’Neill also raised the issue of some Indigenous Australians facing barriers to opening bank accounts because they couldn’t obtain a birth certificate and provide the required 100 points of identification.

Ms Pogonoski said Westpac had an Indigenous team that was actively working on those issues and was also looking at ways to improve connectivity to Indigenous communities, especially in circumstances where there was limited access to mobile phone and internet services. 

The inquiry, which has sat in Canberra, Melbourne and now Adelaide, will move to Perth on Wednesday.

Posted , updated