By Chantal Mousad
for the 2025 Risky Women Writing Competition, presented in partnership with Ocorian
What happens when banks’ good intentions to comply with regulations accidentally label entire communities as “vulnerable”? Enter the updated Banking Code of Practice, where the push for fairness could unintentionally lead to stigma. It’s a fine line between protection and pigeonholing!
What happens when compliance with banking law risks becoming discriminatory?
This is the dilemma facing Australia’s banks under the updated Banking Code of Practice (BCOP). The 2024 revisions require institutions to strengthen protections for vulnerable customers, building on the Australian Banking Association’s (ABA) Customer Vulnerability Guidelines. The intention is clear: ensure fairer treatment of people experiencing hardship, language barriers, or disadvantage (Australian Banking Association, 2024).
But here lies the ethical tension. If compliance leads to automatically categorising Aboriginal and Torres Strait Islander peoples as “vulnerable,” the outcome may be stigma rather than support. For the financial sector, the challenge is ensuring compliance while also upholding cultural respect and equity.
When Compliance Risks Harm
Labelling entire communities as vulnerable risks undermining trust and dignity. While some Aboriginal and Torres Strait Islander individuals do face systemic barriers, not all are vulnerable customers. Automatic classification reduces people to stereotypes and overlooks their agency.
The Gulanga Good Practice Guide (2016) emphasises that Indigenous leaders consistently call for genuine consultation, transparency, and empowerment — not decisions imposed on their behalf. As one Awabakal voice from Mulubinba noted, communities value being active participants in designing policies, not passive recipients of them.
Compliance alone is not enough. Ethical practice requires cultural respect.
A More Respectful Approach
Financial institutions can move away from identity-based categorisation toward circumstance-based assessment. Instead of labelling, respectful and neutral questions can identify vulnerability:
- Are you currently experiencing any financial difficulty that is affecting your day-to-day living?
- Are you in a remote or isolated location that is making it difficult to access banking services?
- Are you experiencing domestic violence that is impacting your financial wellbeing?
These questions focus on real needs, not assumptions about identity. They allow staff to assess vulnerability on an individual basis — with dignity intact.
Embedding Free, Prior and Informed Consent (FPIC), a principle from the United Nations Declaration on the Rights of Indigenous Peoples (UN, 2007), can also guide culturally respectful assessments. Consent must be given freely, prior to implementation, and with sufficient information for customers to make empowered choices.
Co-Design and Cultural Competence
The solution goes beyond protocols. Financial institutions should partner with Aboriginal and Torres Strait Islander organisations to co-design frameworks that reflect lived experiences. Formal partnerships would support self-determination and ensure policies are genuinely inclusive.
Training is equally vital. Staff must be equipped to understand cultural differences and avoid harmful assumptions. Embedding cultural competence into customer service will build trust and improve outcomes (National Indigenous Australians Agency, 2024).
Leading by Example
The banking industry has the opportunity to lead by:
• Going beyond compliance: from “meeting the minimum” to setting ethical and cultural best practice.
• Moving beyond stereotypes: from identity-based labelling to circumstance-based assessment.
• Deepening engagement: from one-off consultation to continuous co-design and dialogue.
Regular review of policies with Indigenous leaders will help ensure practices remain current, respectful, and effective. Ongoing consultation allows institutions to anticipate emerging issues and adapt proactively.
By embedding these principles, banks can demonstrate that regulatory compliance and cultural respect are not mutually exclusive — they are mutually reinforcing.
Conclusion: Inclusion Beyond Obligation
Achieving inclusivity requires more than ticking a compliance box. It is about embedding ethical respect into everyday banking practices. The sector’s challenge — and its opportunity — is to transform regulatory obligation into ethical leadership.
By rejecting automatic classification and embracing culturally respectful assessments, banks can uphold both the Banking Code of Practice and the dignity of Aboriginal and Torres Strait Islander peoples.
If achieved, this would not only satisfy compliance requirements but also set a higher benchmark for the entire financial services industry: proving that ethical banking is not only possible, but essential for a fairer future.
References
• Australian Banking Association. (2024). Customer Vulnerability Guidelines. Retrieved from ABA
• Gulanga Good Practice Guide. (2016). Preferences in Terminology when Referring to Aboriginal and/or Torres Strait Islander Peoples. ACTCOSS.
• National Indigenous Australians Agency. (2024). Cultural Competency Frameworks: Guidance for Inclusive Practices. Retrieved from NIAA
• United Nations. (2007). United Nations Declaration on the Rights of Indigenous Peoples. Retrieved from UN