When a financial services licensee or a credit licensee finds a compliance breach it needs to make a number of decisions including:
- what is the scope of the breach?
- what does it need to do to fix it?
- will it report the breach to ASIC? (for significant AFSL breaches there is a 10 business day time limit)
- does it need to compensate customers?
- what does it need to do to prevent it happening again?
- For Credit Act breaches, will it make a penalty application to a court?
In April we discussed ASIC’s response to BOQ’s report of a breach relating to a failure to link Mortgage Offset Accounts (MOA) to some eligible home loan accounts over a number of years.
BOQ agreed to appoint an independent expert to review its remediation processes to ensure that:
- all affected customers are identified and appropriately compensated, and
- BOQ’s compliance systems are adequate to prevent a similar error occurring in future.
BOQ has now announced that it has completed a comprehensive review of its products, processes and systems, identifying a number of legacy issues. The review has identified the incorrect application of interest rates and fees.
As a result of this review, BOQ will refund customers an estimated $34.5 million and incur additional remediation costs of $11.5 million.
BOQ said: “The problems have been caused by a number of issues, including overly complex products which required too many manual processes… Systems have also been put in place to ensure fees are being appropriately collected.”
