Years on from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry and its “fee for no service” scandal, banks are still at risk of charging deceased people’s accounts fees for products they’re not using. ASIC was still taking banks to federal court about this issue just last year. It seems incredible that large, well-resourced organisations would expose themselves to this risk of significant remediation, but when you consider it from the perspective of a data expert—well, it’s less surprising.
A little background on the importance of customer data in banking, first. In Australia’s banking sector, customer due diligence is incredibly vital. Know Your Customer (KYC) processes are a cornerstone of banks’ Anti-Money Laundering and Counter-Terrorism Financing (AML/CTF) programs, which makes customer identification procedures critical to their compliance activities. There’re also other good reasons. Robust identification and verification procedures limit the bank’s exposure to other forms of risk, such as fraud or loan risks. Even privacy legislation has a role to play, for, although deceased people aren’t strictly covered under the Privacy Act, personal information about deceased people may also constitute personal information about their next of kin.
On paper, it sounds both important and straightforward, then, that such organisations should have a complete understanding of exactly who their customers are, what products they use, what fees they’re being charged and how the organisation is obligated to treat them. But it becomes much less so when considered in detail: banks in Australia have millions of customers, and of those, any given customer may have multiple accounts, some of them perhaps joint accounts, some of them under different surnames, and which may exist in relation to any number of products. It’s a complex, multifaceted data landscape with many moving parts.
The BCCC’s 2023 report on the management of deceased estates concludes that the systems, processes and procedures in use to manage this type of customer data are frequently fragmented and challenging to reconcile into a complete and holistic view of a customer. This is why these organisations can’t always flag deceased customers in all data sets within appropriate timeframes, and why they may continue to charge inappropriate fees after notification of a customer’s death.
This is an extraordinarily common problem in customer databases of all kinds and sizes. Sprawling fragmented systems may be a genuinely challenging problem to rectify, but it’s both possible to fix, and worth fixing. Retaining unflagged deceased contact records in a database puts organisations at increased risk of fraud, privacy and regulatory noncompliance, unnecessary marketing costs, and reputational damage.
While it’s not a topic that everyone’s comfortable discussing so frankly, here at DCA, our Data Services team is intimately familiar with the havoc records relating to the deceased can wreak on customer or donor databases—and what further challenges can flow on from them for the whole business. That’s because we’re official brokers of the Australian Death Check, which is a register of deceased Australians taken from state and territory births, deaths and marriages registers. Our team frequently work with organisations that want to flag deceased people in their records so they can offer condolences to loved ones, comply with industry regulations, avert specific risks, or simply avoid reaching out with insensitive marketing offers.
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