The Banking Code and Compliance Committee (BCCC) has taken the unprecedented step of naming the largest regional bank, Bendigo and Adelaide Bank for “serious and systemic” breaches of its code of conduct.
It is the first time a bank has been named publicly for breaches of the banking code by the BCCC. The breaches date back to 2015 to 2016, so they are not current and occurred under the former management of the bank.
In a statement issued on Wednesday, the Compliance Committee said the naming was due to the seriousness of the breaches.
These related to aggressive debt collection procedures and insensitivity in dealing with customers in financial distress in its Great Southern Loans subsidiary. The BCCC’s audit found Bendigo had systemically breached code provisions related to debt collection, financial difficulty, training and competency, privacy and confidentiality and complaints handling.
“The breaches occurred within Bendigo and Adelaide Bank’s Great Southern Loans (GSL) business unit over a period of four years from February 2015 to February 2019. They include non-compliance with a number of the 2013 Code’s important consumer protections, such as debt collection practices and the treatment of customers experiencing financial difficulty,” the Committee said in Wednesday’s statement.
The bank has identified 450 affected customers and has set aside $1 million in remediation payments, to compensate customers for the distress caused.
The BCC said Bendigo failed to discipline employees who issued incorrect collection notices, did not consider borrowers’ financial circumstances and contacted customers repeatedly over outstanding debts,
BCCC chair Ian Govey said the decision to impose the naming sanction had not been made lightly.
“In deciding to name Bendigo and Adelaide Bank, the Committee has given careful consideration to a number of factors, including the seriousness of the breaches and their likely impact on GSL customers,” he said in the statement.
The bank has now strengthened call recording systems, complaints management, training, and processes.
And BCCC CEO, Sally Davis said “This was not just a one-off member of a team who conducted some debt collection in a way that was outside the boundaries of debt collection guidelines that banks are supposed to comply with.”
“It was serious and systemic, it was ongoing for quite some time.”
Bendigo Bank chief executive Marnie Baker said the bank’s actions were “not acceptable”.
“We regret our actions and sincerely apologise for any negative impacts these breaches have caused for our customers. We fell short of our own expectations and that of our customers and the community,” she told the media.
Bendigo shares eased 2.6% to $6.04 yesterday.