Banks on notice again over dead customer fee controls and deceased estate failures

Banks are on notice again over dead customer fees after a review found some lenders were still sitting on uncompleted deceased estate checks years after industry warnings.

The gaps risk dragging grieving families through extra paperwork, repeated calls and delays while trying to settle a loved one’s accounts.

The Banking Code Compliance Committee said three of the 11 banks reviewed still needed work on quality assurance, fee controls and staff training.

Some planned testing was not expected to start until as late as 2027.

Committee chair Sean Hughes said banks with unresolved weaknesses had been “on notice for long enough” and should expect more formal and targeted scrutiny.

“These are not new issues, nor are they particularly complicated or expensive to repair,” Mr Hughes said.

“We made clear recommendations to the industry and gave banks ample time to review their practices.

“If gaps still remain, we may consider further investigation and formal action.”

The review looked at banks that were not part of the committee’s original 2023 inquiry into deceased estates.

That inquiry found banks had charged inappropriate fees after death, delayed instructions, kept poor records and communicated inconsistently with estate representatives.

The committee later sanctioned three banks for serious and systemic non-compliance with Banking Code commitments.

ANZ was named and shamed after the committee found it had failed to stop or refund fees charged to thousands of deceased customers, and did not respond to estate representatives in a timely manner.

The big four bank later remediated more than 18,900 customer accounts for fees and costs linked to delays, and was fined $35 million.

The deceased estate failures fine was later folded into a separate $240m penalty agreed between ANZ and the Australian Securities and Investments Commission over wider misconduct.

That broader case also covered hardship notice failures, misleading savings rate statements and institutional trading misconduct.

Bank of Queensland was also named after the committee found BoQ and its subsidiaries had wrongly charged $158,834 in fees and interest to dead customers’ accounts.

The failures involved more than 2500 breaches between 2019 and 2023.

The new review found most banks had taken action since the 2023 report. Eight of the 11 banks reported changes to systems, processes, product identification, monitoring and staff training.

“Our 2023 report made clear that banks had more work to do,” Mr Hughes said.

“This follow-up review shows that most, but not all banks have taken the recommendations from that original report seriously.”

But the committee said progress was not enough.

Four banks found their systems did not always show every product held by a deceased customer — a problem linked to legacy technology that was common in subsidiary brands.

That meant staff sometimes had to search several systems or rely on estate representatives to identify relevant accounts.

Two banks were still using email-based case management, spreadsheets, manual logs and staff notes to track deceased estate matters.

The committee said those arrangements could increase staff error, slow processing and hide where a case had stalled.

“Banks should not treat deceased estate management as a narrow operational process or a low-volume exception,” Mr Hughes said.

“It is a core responsibility owed to customers and their representatives at a time when poor service can cause real detriment and exacerbate distress.”