Bank named and shamed for hounding investors

Code violations are so serious that it's the first time in history that the industry watchdog has explicitly named the financial institution.

| More on:

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Bendigo and Adelaide Bank Ltd (ASX: BEN) has been shamed by an industry authority for its debt collection practices from investors.

The Banking Code Compliance Committee (BCCC) found that Bendigo and Adelaide Bank violated the code multiple times from 2015 to 2019. 

The breaches related to "debt collection practices and the treatment of customers experiencing financial difficulty" by its Great Southern Loans (GSL) business unit.

This is the first time ever the committee has explicitly named a bank for violations.

"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," said BCCC chair Ian Govey.

GSL, a managed investment scheme from an agri-business, was acquired by Bendigo and Adelaide Bank upon its merger with Adelaide Bank in 2007.

The agri-business failed and was liquidated a couple of years later, leaving some investors with debt without any assets.

Legal cases over $300 million in outstanding loans then ensued with GSL stopped from collecting debts in 2012.

The bank was finally authorised from 2015 to start calling in those debts — and that's when the troubles seem to have started.

"We regret our actions and sincerely apologise for any negative impacts these breaches have caused for our customers," said Bendigo and Adelaide Bank managing director Marnie Baker.

"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."

Govey acknowledged that Bendigo and Adelaide Bank has taken remedial steps since an audit into GSL.

"We also note Bendigo and Adelaide Bank has commenced efforts to remediate customers who were adversely impacted by non-compliance with the 2013 Code," he said.

Bendigo and Adelaide Bank shares were down 2.74% at 2:20pm AEST Wednesday, to trade at $6.03.

What exactly did Bendigo Bank and GSL do?

The BCCC found the bank hounded customers to the point where they were spammed repeatedly with payment demands to wrong email addresses and had their private information disclosed to third parties.

Process servers who served legal papers from the bank to the customers also violated the BCCC code.

Bendigo and Adelaide Bank was also accused of not properly training its debt collections staff nor keeping appropriate records. The GSL collections team ignored customers who were in financial distress and the bank didn't have a separate unit for dealing with complaints.

Bendigo and Adelaide Bank also initially "failed to co-operate" with the committee's investigation in 2017. 

"We accept and have reflected deeply on the findings and we understand how the mistakes occurred," said Baker.

"Our Great Southern collections team was established and operated separately from the bank's broader operations, was inadequately resourced, and our processes and systems were insufficient for these staff and the Great Southern customers."

Bendigo and Adelaide Bank has set aside $1 million on its books for remediation to customers.

"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," Baker said.

Motley Fool contributor Tony Yoo has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Unsure man analysing data on laptop.
Share Gainers

Here are the top 10 ASX 200 shares today

ASX investors had a rough start to the week this Monday.

Read more »

A man slumps crankily over his morning coffee as it pours with rain outside.
Broker Notes

Guess which popular ASX 200 stock Bell Potter just downgraded

Let's see what the broker is saying on this blue chip.

Read more »

Crude oil barrels rocketing.
ETFs

Why did the BetaShares Crude Oil ETF just spike 4%?

This ETF is attracting buyers in today's seller's market.

Read more »

A male sharemarket analyst sits at his desk looking intently at his laptop with two other monitors next to him showing stock price movements
Broker Notes

Leading brokers name 3 ASX shares to buy today

Here's why brokers believe that now could be the time to snap up these shares.

Read more »

Woman with an amazed expression has her hands and arms out with a laptop in front of her.
Share Gainers

Why BWP, Metcash, Resolute Mining, and SHAPE shares are pushing higher today

These shares are starting the week on a positive note. But why?

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the share price declines.
Share Fallers

Why Adairs, ANZ, Aurelia Metals, and Pilbara Minerals shares are falling today

These shares are having a tough start to the week in the red. But why?

Read more »

Miner standing in a mine site with his arms crossed.
Broker Notes

Up 41% in 2025, does Macquarie think Lynas Rare Earths shares have peaked?

The company is up nearly 400% in 5 years.

Read more »

A financial expert or broker looks worried as he checks out a graph showing market volatility.
Share Market News

How far could equity markets fall following the US' attack on Iran?

If oil prices rise, it could be bad news for investors.

Read more »