Watchdog slams Bendigo and Adelaide for ‘systemic breaches’ on Great Southern

The committee's annual report for the 2020 financial year called out the non-major bank for breaches around the code's consumer protections for debt repayment.

The committee noted it was only the second time since 2008 that it had considered breaches by a bank serious enough to warrant a public call-out in its annual report and on its website.

Great Southern collapsed in 2009 owing more than $600 million to investors, including a significant number of advice clients, many of whom had taken out loans through Bendigo and Adelaide's Great Southern Loans (GSL) business unit to take part in the investment scheme.

“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,” committee chair Ian Govey said.

“We acknowledge the work the bank has undertaken to date to address the issues that came to light following an audit into GSL’s operations, and to fix the root causes to ensure code compliance. We also note Bendigo and Adelaide Bank has commenced efforts to remediate customers who were adversely impacted by non-compliance with the 2013 code."

Responding to the findings, Bendigo and Adelaide said it had "taken swift and decisive action" to remedy historical breaches to the code's debt collection practices, the majority of which it said occurred during 2015 and 2016.

“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. These actions do not reflect who we are and what we stand for. We always strive to put our customers and communities first and these historic issues are not acceptable," the bank's managing director Marnie Baker said.

“The bank has addressed the operational issues to prevent this from happening again and has established a remediation program to provide payments to customers where we made mistakes that had an adverse customer impact."

Bendigo and Adelaide said it had taken a number of specific actions to ensure better compliance with the code's debt collection practices in future, including integrating the team responsible for collection of Great Southern loan repayments with its financial difficulties team, and strengthening its oversight processes to "regularly review all Great Southern collections and financial difficulty activities".

The news follows ifa reporting in July that a Sydney law firm had gathered almost 600 expressions of interest for a new class action to challenge the validity of loan terms agreed to by Bendigo and Adelaide Bank customers caught up in the Great Southern collapse.