The Term Deposit Rollover and the Vulnerable Customer
Ken, 84, holds a $480,000 term deposit maturing in three days. He calls the branch and asks to roll the full amount into a five-year term at the advertised rate, saying he needs the money 'when my wife goes into care, probably next year'. The branch officer, Alice, notes Ken sounds confused about dates and mentions he has a son who 'handles things'. Alice's bank policy says staff should consider whether a customer may be experiencing diminished capacity and should offer a support person, but the policy is described as guidance, not a rule. The advertised five-year rate is 0.9% higher than the one-year rate. Ken becomes irritated when Alice asks about his son and says he just wants it done.
1. What is the central judgement Alice must make, and what should she do before processing the rollover?
Read the worked answer
The central tension is between customer autonomy (Ken is an adult who can direct his own banking) and duty of care (there is a specific, credible signal that the instruction may not match his actual need).
The mismatch is the key fact. Ken says he may need the funds 'next year' but instructs a five-year lock-in. That is not a small inconsistency - it is a direct conflict between stated need and instruction, and it is exactly what a professional should surface. The rate differential explains why the five-year product is attractive, but it does not resolve the liquidity conflict.
Before processing, Alice should:
- Restate the conflict plainly: 'You've told me you may need this money next year; a five-year term would lock it in. Let me show you what breaking it early would cost.'
- Quantify it - estimate the early-termination adjustment or interest clawback on $480,000 so the trade-off is concrete, not abstract.
- Offer alternatives: a one-year term, a split (e.g. part one-year, part longer), or a shorter term with rollover.
- Offer, not demand, a support person or the son's involvement; refusing to proceed unless he agrees to involve his son would be overreach.
- Record the conversation, the options offered, and Ken's decision and stated reasons.
If Ken, having heard the trade-off, still instructs the five-year term, Alice should generally process it and document clearly. The obligation is to inform and record, not to override a capacitous adult. If Alice genuinely believes he cannot understand the trade-off, she should escalate under the bank's capacity process rather than simply refuse.
2. Alice's supervisor says: 'The policy is only guidance, so just process it and note the call.' Evaluate that instruction.
Read the worked answer
The instruction is procedurally convenient but professionally weak, for three reasons.
1. 'Guidance' does not mean 'optional'. Guidance exists because the bank has identified a foreseeable harm - vulnerable customers being locked into unsuitable products. Departing from it without reason is a conduct risk even where no rule is breached. The correct approach is to follow the guidance or document why a different course was appropriate, not to skip it because it is not mandatory.
2. The record would be self-defeating. 'Noted the call' would record that a conflict between stated need and instruction was observed and not addressed. If Ken later complains or suffers loss, that note is evidence against the bank. A short delay to explain the trade-off is cheaper than a remediation case.
3. It inverts the purpose of the conversation. Alice's questions are not obstacles to the sale; they are how the bank demonstrates it acted in the customer's interest. Processing without addressing the liquidity conflict converts a defensible sale into an indefensible one.
What Alice should do: follow the guidance, offer the alternatives, quantify the break cost, and document Ken's decision. If the supervisor insists, Alice should ask for the instruction in writing and escalate to compliance. She should not simply comply and note the call - that records the problem without resolving it.