Major financial institutions in Australia take around five years to identify significant breaches and finding solutions for customers takes even longer, ASIC has found.
The regulator’s report shows institutions take an average of over four years (1,726 days) to identify significant breaches. These caused financial losses to the tune of approximately A$500m, however, that money was never returned to customers. under the form of compensation.
“Breach reporting is a cornerstone of Australia’s financial services regulatory structure,” said ASIC chair, James Shipton.
“Many of the delays in breach reporting and compensating consumers were due to the financial institutions’ inadequate systems, procedures and governance processes, as well as a lack of a consumer orientated culture of escalation.
“Our review found that, on average, it takes over 5 years from the occurrence of the incident before customers and consumers are remediated, which is a sad indictment on the financial services industry. This must not stand.”
The corporate watchdog also put Bank of Queensland, Bendigo Bank, Credit Union Australia, Greater Bank, Heritage Bank, Macquarie and Suncorp under the microscope.
Across the 12 financial services firms, it took about four years (1517 days) to complete an investigation from the time a breach was discovered and investigated.
One in seven significant breaches (110 of 715) were reported to ASIC much later than the legal obligation of 10 business days once an incident is investigated and determined as a significant breach.
The Australian Banking Association (ABA) has replied to the corporate regulator’s breach obligations report by saying that it is another wake-up call for the banks.
“This investigation shows that banks’ efforts to identify issues, report them to ASIC and compensate customers is not good enough,” ABA’s chief executive, Anna Bligh, said.
The report comes amidst increased scrutiny of banking institutions following a royal commission into the activities of financial organisations, and it is one that ABA has even responded to, adding that the efforts currently delivered by banks weren’t good enough.
Even the watchdog is under pressure as the federal government warns about the problems at the corporate regulator.