Bank of Queensland (BoQ) has just announced it will refund customers an estimated $34.5 million and incur additional remediation costs of $11.5 million after ‘a number of legacy issues’ were discovered.
The lender undertook a ‘comprehensive’ review of its products, processes and systems following the discovery of a mortgage offset account issue late last year. ASIC has been advised of the issues and BoQ says its priority is to ensure affected customers are reimbursed as soon as practicable.
Around 4% of BoQ’s customer base is affected by the issues, some of which date back as far as 2004.
However, despite the remediation costs, BoQ’s board of directors confirms that profit before tax for the year to August 31 is currently expected to be at the top end of analysts’ consensus range of $339m to $368m.
BoQ CEO, Stuart Grimshaw, says that while he was ‘disappointed’ at the impact of the issues on the bank’s customers and business, the completion of the review represented an important milestone in BoQ’s recovery.
“We have worked hard to address legacy issues and ensure the business is both robust and well positioned for future growth,” says Grimshaw.
“One of the last steps in the bank’s recovery has been this detailed review of our products, processes and systems. As well as the product review, we have assessed a broad range of areas from branch security through to disaster recovery plans and lending processes. The rigorous process we have undertaken gives us confidence that there are no other significant legacy issues in our business, aside from existing litigation.”
Grimshaw says the problems were caused by a number of issues, including ‘overly complex products’ which required too many manual processes.
He says that, while it’s frustrating these issues were identified sooner, BoQ has now acted to ensure the problems won’t recur.
“We are not only addressing the underlying issues but taking proactive steps to minimise future risks. This includes simplifying our product suite and improving our back office procedures, for example through the automation of lending processes from origination through to the back office.”
The process of refunding customers is expected to be completed by the end of 2014.