Banking services

6.137   Banking is another area of Commonwealth legislative responsibility,[125] in relation to which the application of the decision-making model might be considered. Article 12(5) of the CRPD requires States Parties to take all appropriate and effective measures to ensure the equal right of persons with disabilities to control their own financial affairs and to have equal access to bank loans, mortgages and other forms of financial credit.[126]

6.138   In practice, a tension emerges between these rights and the need to protect people from financial abuse and exploitation in conducting their banking and financial activities. There is also a need to ensure the legal validity of financial transactions.

6.139   An issue in relation to banking is the refusal of some banks to allow persons with disability to access or operate a bank account independently, and hesitancy in recognising informal supporters. Such refusals may reflect bank concerns about capacity or financial exploitation.[127] In this context, the Australian Bankers’ Association (ABA) has commented that

Financial exploitation of a vulnerable person is a deeply challenging area for banks. Every customer’s situation is unique and banks have an obligation to protect their customers’ privacy, maintain the bank’s duty of confidentiality, and to not unnecessarily intrude into their customers’ lives.[128]

6.140   The ABA’s Code of Banking Practice recognises the needs of older persons and customers with a disability to have access to transaction services and commits banks to taking reasonable measures to enhance their access to those services.[129] In addition, there are a number of industry standards and guidelines to assist banking accessibility. Individual banks have various customer service commitments, including Disability Action Plans and other service charters as well as policies, practices, business rules and product and service solutions to assist certain customers.[130]

6.141   The ABA issues other non-binding industry guidelines that are relevant to the ability of persons with disability to engage with the banking industry and to make decisions in that context.[131] In particular, the ABA has issued guidelines on responding to requests from a power of attorney or court-appointed administrator. These explain how powers of attorney and court-appointed administrator arrangements apply to banks’ relationships with their customers; and outline a framework that banks can use to consistently deal with requests from attorneys and administrators.[132]

6.142   The ABA guidelines note that it ‘is not the role of bank staff (or a bank) to determine a customer’s capacity’.[133] They outline the roles of administrators and guardians, how to recognise their authority, and highlight differences in the role, authority and responsibilities of guardians and administrators between jurisdictions.[134]

Encouraging supported decision making

Recommendation 6–5               The Australian Bankers’ Association should encourage banks to recognise supported decision-making. To this end, the ABA should issue guidelines, reflecting the National Decision-Making Principles and recognising that:

(a)      customers should be presumed to have the ability to make decisions about access to banking services;

(b)     customers may be capable of making and communicating decisions concerning banking services, where they have access to necessary support;

(c)      customers are entitled to support in making and communicating decisions; and

(d)     banks should recognise supporters and respond to their requests, consistent with other legal duties.

6.143   There may be some reluctance on the part of banks to allow people who need decision-making support to access banking services independently and to recognise the role of supporters. Banks may prefer to recognise only formal, substitute decision-making appointments. The ABA guidelines state, for example:

Banks have a contractual obligation to act in accordance with the customer’s mandate. If a customer has set up a power of attorney, or a court has appointed an administrator to represent a customer’s interests, then these authorities are considered to be in line with the customer’s mandate. It is important to recognise and respond to requests from these authorities as if they were made from the customer themselves.[135]

6.144   In the ALRC’s view, people who need decision-making support should not necessarily have to access banking services only through an administrator or the holder of a power of attorney.

6.145   Submissions referred to difficulties faced by persons with disability in obtaining access to banking services, including because supporters are not recognised. Pave the Way, for example, stated that banks often refuse to allow persons with disability to have their own bank account:

This is a problem that is regularly experienced by families who are trying to open an ordinary bank account for their family member who has a disability. We are aware of numerous examples of banks being willing to open an account for a child without disability but refusing to open an account for a child with disability. Similarly banks regularly refuse to open accounts for adults with disability. While it appears that there is no actual legal impediment to banks offering this service, some banks express concern about capacity and others cite an obligation to protect vulnerable people. When facing this problem some families decide to seek an administration order.[136]

6.146   The Equal Opportunity Commission of South Australia referred to a decision of the Equality Opportunity Tribunal (SA), which found that a finance company had discriminated against a loan applicant on the basis of disability. The Commission stated that the decision is ‘a reminder of the risk that service providers may take in making assumptions about a person based on a disability, without adequately assessing a person’s capacity’.[137]

6.147   The Centre for Rural Regional Law and Justice and the National Rural Law and Justice Alliance submitted that recognition of supported decision-making arrangements could better enable people with disabilities to ‘exercise equal legal capacity in their use of financial services’. While the reluctance of banks to recognise informal arrangements was said to be understandable, provision for supported decision-making could help provide certainty for banks, while still ensuring that ‘support for people with disabilities in the exercise of legal capacity is tailored to their needs, as required by Article 12 of the [CRPD]’.[138]

6.148    Banking may not be an area in which the full Commonwealth decision-making model can easily be applied. It may not be practical, for example, to impose any legislative requirement on banks to set up their own systems for recognising supporters and responding to requests from these supporters.

6.149   The nomination of a supporter does not involve the limitations and protective formalities of, for example, a power of attorney.[139] As discussed in Chapter 2, the ‘paradigm shift’ towards encouraging supported, rather than substitute, decision-making, is a relatively new development. Fully recognising supported decision-making arrangements would constitute a break with existing banking practices, which are based on contract and agency law, with potentially unforeseen legal consequences.[140]

6.150   Nevertheless, there may be room to encourage a more flexible approach on the part of banks, without being prescriptive, and recognising that banks bear risks in relation to voidable transactions.

6.151   The ALRC recommends that the ABA provide additional guidance on how banks may meet the needs of people who require decision-making support to access banking services. This would be consistent with the ABA’s Code of Banking Practice.[141]

6.152   The new guidance should reflect the National Decision-Making Principles, including the Support Guidelines. In particular, banks should be encouraged to recognise that customers:

  • should be presumed to have the ability to make decisions about access to banking services;
  • may remain capable of making and communicating decisions concerning banking services, where they have access to necessary support; and
  • are entitled to support in making and communicating decisions and banks should, where possible and consistent with other duties, recognise supporters and respond to their requests.

6.153   The proposal in the Discussion Paper attracted some support from stakeholders.[142] The OPA (SA and Vic) supported the proposal and highlighted the importance of legally recognised supported decision-making arrangements in helping people ‘to better and more easily deal with financial institutions, and other third parties’. This was said to be particularly important to ‘obtaining and communicating often complex information which may be an otherwise difficult undertaking for a person with a cognitive impairment’.[143]

6.154   However, AGAC noted the ‘very practical’ risk of undue influence in banking transactions, if banks recognise supporters who do not have some formal status. AGAC considered that ‘banks are highly unlikely to expose themselves to a contingent liability that would at least prima facie be so evident’.[144]

6.155   The ABA submitted that industry guidelines are not necessary to encourage banks to recognise supported decision making because banks have already ‘implemented policies, practices, and business rules as well as provided products, services and tools as solutions to assist customers with special needs’.[145] Banks may, for example, provide facilities for co-signing, allowing designated others to conduct banking along with the account holder.

6.156   The ABA expressed concern about ‘supported decision making or co-decision making arrangements that do not establish clear boundaries for all parties’ and about customers entering arrangements with others, especially where customers breach their contract with the bank (for example, by disclosing PINs) or give up their consumer rights and protections.

The ABA believes that supported decision making or co-decision making may expose individuals to liability and legal risks, rather than provide them with greater financial independence and autonomy, decision making freedom and flexibility. Additionally, it is inappropriate for banks and other service providers to be expected to identify or determine the capacity of their customers. Banks are not in a position (or qualified) to establish (or question) whether a customer has capacity or not.[146]

6.157   On the other hand, the ABA confirmed that some banks have introduced ‘product and service solutions to assist customers have supported decision making without exposing these customers, or their banks, to liability and legal risks’.[147] While some ‘alternative and third party arrangements may present certain liability and legal risks’ banks have taken these risks in order to assist their customers.[148]

6.158   These arrangements are consistent with the outcomes envisaged by the ALRC’s recommendation for ABA guidelines encouraging supported decision-making. These state that banks should recognise supporters and respond to their requests, ‘where possible and consistent with other legal duties’.[149]

6.159   In the ALRC’s view, an ABA guideline and associated commentary could encourage banks to explore options for further developing forms of supported decision-making in a flexible way—for example, through contractual means. This should not be a disjuncture with current approaches, given banks are said to have ‘already embedded the values of the National Decision-Making Principles into the way in which they deal with their customers’.[150]