Concerns about privacy breaches and unfair competition are on high after reports that National Australia Bank (NAB) is being tipped off when any of its business banking customers applies for a loan from a rival financial institution.
The bank confirmed that it does, in fact, receive alerts from a credit reporting agency, along with other sources, to identify when its existing customers seek out loans outside of NAB, The Sydney Morning Herald reported on Monday (June 20).
A spokesman for the bank told The Sydney Morning Herald that those tips are being used to help it manage its customer relationships.
“It’s important our bankers keep in touch with their business customers, especially when they are taking out new lending with other institutions, to understand the intent of the finance and how it will impact on their business operations,” the spokesman explained.
“NAB believes in lending responsibly to our business customers.”
But many have stated that the bank’s access to this type of information is a violation of its customers’ privacy and can lead to issues with keeping competition fair.
According to consumer law expert Justin Malbon, NAB’s alert system is “sneaky and scary,” noting that banks should be required to have consumer consent before initiating that type of monitoring.
Malbon also described the unfair competitive advantage gained by NAB enables it to conduct private discussions with rival banks and submit counterbids in order to keep their banking customers.
“How come NAB gets this privileged information and can butt in and try to take another bank’s business?” Professor Malbon asked. “It seems rather underhanded.”